Pilarinos v Australian Securities and Investments Commission
[2006] VSC 301
•11 August 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 4679 of 2006
| JERRY PILARINOS AND ORS | Plaintiffs |
| v | |
| AUSTRALIAN SECURITIES AND INVESTMENT COMMISSION | Defendant |
---
JUDGE: | GILLARD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 31 July 2006 | |
DATE OF JUDGMENT: | 11 August 2006 | |
CASE MAY BE CITED AS: | Pilarinos and Ors v ASIC | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 301 | Revised 11 August 2006 |
---
REINSTATEMENT OF COMPANY – Section 601(AH) Corporations Act 2001 – Grievance to be determined at date of application – Meaning of grievance – Not qualified – Applicants aggrieved by post-deregistration acts done with knowledge of deregistration – Inappropriate on application to decide whether future litigation likely to succeed – No discretionary bars – Reinstatement ordered.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Dr C. Pannam QC with Mr S.G. Hopper | Mitrakas Savas & Co |
| For the Defendant | Mr M. Duffy | Australian Securities and Investments Commission |
| For the State of Victoria intervening | Mr G. Garde QC with Mr P. Fox | Victorian Government Solicitor |
TABLE CONTENTS
Parties
Section 601(AH)(2) of the Corporations Act 2001
Facts – party aggrieved
A person aggrieved
Just that company be reinstated
Discretion – futility
Conclusion
HIS HONOUR:
This is an appeal from an order made on 5 July 2006 by a Master dismissing an application made by three plaintiffs seeking the reinstatement of a company that was deregistered. The appeal is a re‑hearing de novo and accordingly, the application that was before the Master has to be considered and determined afresh.[1]
[1]See Rule 77.05(7)
The proceeding was instituted by originating process on behalf of three plaintiffs and sought an order that the Australian Securities and Investments Commission (“ASIC”) reinstate the registration of a company called Palais de Danse Pty Ltd (“Palais de Danse”), pursuant to the Corporations Act 2001 (“the Act”). In the alternative, the plaintiffs sought an order that the liquidation be terminated. The application was made pursuant to s.601(AH)(2) and 601(AH)(3)(b), or alternatively under s.482(1), of the Act. The matter came on before a Master, who, in a considered judgment, dismissed the application with costs.
Parties
It is necessary at the outset to identify the parties to the application. The first plaintiff, Jerry Pilarinos (“Mr Pilarinos”), is a director and shareholder of the third plaintiff, Bradto Pty Ltd (“Bradto”). The second plaintiff, Leslie Albert Hyams (“Mr Hyams”), was a former shareholder and director of Palais de Danse. The defendant to the application is ASIC.
ASIC filed a notice of appearance on 20 February 2006, in which it stated that it intended to appear at the hearing but had “not yet determined whether the Australian Securities and Investments Commission will oppose or support the application.”
On this appeal, the solicitor acting for ASIC, Mr Duffy, informed the Court that in March, the solicitor then appearing for ASIC had informed the Master that it would be appropriate for the initiating process and supporting affidavits to be served on the State of Victoria. This was done on 22 March 2006. Counsel were briefed on behalf of the State of Victoria, and directions were given as to the filing of affidavit material. The State of Victoria appeared by counsel at the hearing and opposed the application on the ground that the plaintiffs were not aggrieved persons, as did ASIC. Counsel for the State also submitted that if the company was reinstated and sued the State, the proceeding was bound to fail. The application came on for hearing before the Master on 12 April 2006, and was adjourned, part heard, to 5 May 2006. The Master reserved his decision. He delivered it on 5 July 2006 and dismissed the application with costs on 6 July 2006.
Despite the leave to appear granted to the State being limited to the question of the standing of the plaintiffs, the State of Victoria placed substantial material before the Master and sought to argue that if the company was reinstated, its alleged cause of action against the State of Victoria would fail. Hence reinstatement would be futile. Although the Master did not fully consider that question, he observed at the end of his reasons, after stating he did not have to consider that question; “But on the material before me, I would be surprised if the plaintiffs had a collateral lease in this matter.”
The liquidator of Palais de Danse was approached and there was evidence before the Court that he neither opposed the application nor consented to it.
Although the Master granted leave to the State of Victoria to appear on the application, that decision does not bind me. I am considering the application afresh. At the outset of the appeal hearing, I raised the question of whether the State of Victoria should have leave to be heard on the application in the appeal. I did so because the application before the Master generated substantial affidavit material, long written submissions and counter submissions, and much argument. Although the State of Victoria was not permitted to argue the question of futility, clearly the matter was argued. These applications normally are short and to the point and are resolved fairly expeditiously. The application was heard over two days and finally determined by the Master three and a half months after the application was issued.
Counsel on behalf of the State of Victoria renewed their application to the Court for leave to be heard. The State of Victoria is not a party to the proceeding. It does not have any right to be heard. The Rules of Court permit leave to be granted to be heard.
Before turning to the Rules of Court, I note that the practice in an application such as the present, over a period of nearly 100 years, has been for the parties to the application to be the applicant and the body responsible for registration of companies. As long ago as 1909, this Court required the joinder as a party of the body responsible for the incorporation and registration of companies. In the case of In Re Great Southern Land Investments Co Ltd,[2] Hodges J held that the Registrar-General should be served with an application to restore to the Register of Companies a company which had been struck off the register. Apparently, the application had not been served on the Registrar, and Hodges J said:
“It seems to me that it is just that the company’s name should be restored but I think I ought to require notice of the application be given to the Registrar-General.”[3]
[2][1910] VLR 150.
[3]See supra at p.152.
Notice was given, the Registrar did not appear to object, and his Honour made the order.
The rule of practice is enshrined in the Supreme Court (Corporations) Rules 2003.[4] Rule 2.8 requires that notice of certain applications be given to ASIC. Paragraph 1 deals with the requirement that the rule has effect in respect of particular documents being served on the Commission or notice being given. Paragraph 3 is expressed in these terms:
“3.Unless the Court otherwise orders, if a person makes an application under a provision of the Corporations Act mentioned in column 2 of the item of the following Table, the person must serve on the Commission, a reasonable time before the hearing of the application, a copy of the originating process, or interlocutory process, and supporting affidavit in respect of the application.”
[4]See Chapter 5 of the Rules of Court.
Reference to column 2 shows that any application under ss.482(1) and 601(AH)(2) must be served on the Commission. The practice has been followed for many years.
ASIC has published a policy statement No. 83 concerning reinstatement of companies. The policy statement deals with the appearance by ASIC and it is noted that usually, ASIC does not appear if it does not propose to object, and instead will provide a letter to the applicant advising that there is no objection to the reinstatement. However, by reason of Rule 2.9, if a person intends to appear before the Court at the hearing, it is obliged to file a notice of appearance. ASIC filed a notice of appearance pursuant to Rule 2.9(1) and opposed the reinstatement.
No doubt one of the objects of the requirement of service on ASIC is that ASIC should consider the application and draw any relevant matter to the attention of the Court. No doubt it would be part of ASIC’s duty to inform the Court that because of the particular circumstances of the application, notice should be given to a particular person or body. Whether or not a direction to that effect should be given will depend upon the circumstances.
Rule 2.13 deals with the Court granting leave to a person to be heard in the proceeding. Rule 2.13 provides:
“2.13(1)The Court may grant leave to any person who is, or who claims to be –
(a)a creditor …
(b)…
(c)any interested person –
to be heard in a proceeding without becoming a party to the proceeding.”
Paragraph 2 of the sub-rule deals with costs.
In my opinion, the question is whether the State of Victoria should be granted leave as an interested person to be heard on the application.
It is necessary at this point to state the interest claimed by the State of Victoria.
On 25 August 2005, the State of Victoria commenced a proceeding in the Victorian Civil and Administrative Tribunal (“VCAT”) seeking, inter alia, access to premises located at St Kilda known as the Palace Entertainment Complex or the Palace Nightclub (“demised premises”). Bradto was the registered proprietor of a lease of the premises. It had, in fact, sub-leased the premises to Maztan Pty Ltd, and the latter is currently in possession with the consent of the head lessor, and operates a business known as the Palace Nightclub. On 23 December 2005, the State commenced a proceeding, No. R191 of 2005, in VCAT seeking possession of the demised premises, and Bradto is the respondent. The lease that entitled Bradto to possession is a 50 year lease, which expired on 1 April this year. Hence the application for possession in VCAT. Bradto opposes the application in VCAT.
It is the contention of Bradto in the VCAT proceeding that it is entitled to the benefit of an equitable lease granted to Palais de Danse by the Crown in the right of the State of Victoria many years ago, by reason of an assignment of the interest to a predecessor in title of Bradto. In the alternative, if the assignment did not grant the rights of Palais to an equitable lease, then Bradto wishes to reinstate Palais de Danse as a company and take from it the benefit of an equitable lease which, if binding in law against the State of Victoria, may be a good defence to the claim for possession. A deed seeking to acquire the right on reinstatement was executed on 24 December 2005 between various parties.
The State of Victoria wishes to argue, first, that the plaintiffs are not persons aggrieved within the meaning of s.601(AH)(2) of the Act and, accordingly, that it would not be appropriate to reinstate the company. Further, the State wishes to argue that if the company was reinstated and brought a proceeding against the State of Victoria, it must fail, and accordingly, it would be futile to make the order. The latter question involves a consideration of the facts and the law, in circumstances where the evidence is adduced by affidavit, has not been tested and, what is more, relates to events that go back over at least 40 years and probably longer. As a general proposition, it would be inappropriate for this Court, in an application such as the present, to go into any factual matters which may be the subject of dispute. If the company is reinstated and brings a proceeding against the State of Victoria, then the parties to that litigation will have available to them the full armoury of the law to enable them to ascertain all relevant facts, to test the other party’s case and to make submissions on the law after having a full opportunity of presenting their cases.
If the application is successful, the result is that Palais de Danse will be reinstated to the register. This will mean that the company is resurrected. It ceases to be non‑existent and thereafter is a legal entity. Once it becomes a legal entity, it has all the rights, powers and obligations of any other legal entity, including the right to bring a proceeding in a court of law or VCAT.
In my opinion, the successful outcome of the present application does not affect the rights or the interests of the State of Victoria. There is a well-established principle of law that no person’s rights, property or interests can be affected without giving that person a right to be heard. The principle was stated by Dixon CJ and Webb J in The Commissioner of Police v Tanos,[5] when their Honours said:
“For it is a deep rooted principle of the law that before anyone can be punished or prejudiced in his person or property by a judicial or quasi‑judicial proceeding he must be afforded an adequate opportunity of being heard.”
[5](1958) 98 CLR 383 at 395.
In my opinion, the mere reinstatement of Palais de Danse does not of itself prejudice or affect the rights of the State of Victoria, although the reason advanced for the reinstatement is to enable the company to bring a proceeding against the State.
One of the contentions of the State of Victoria is that it is entitled to appear on this application, and to establish that if a proceeding was brought against it, the proceeding would be doomed to fail. The proper place for the ventilation of the dispute between the parties and its determination is not on an application for reinstatement.
Many applications are made by persons who have suffered injury during employment which occurred many years previously. Application is made to reinstate an employer company which had been deregistered, to enable the plaintiff to have the benefit of a worker’s insurance policy indemnifying the former employer. Often the application is made many years after the employment has ceased, and many years after the deregistration of a company. Often the cause of action accrues many years after the deregistration. If it is necessary to require notice to be given to the person who could be held ultimately responsible, a practice will develop whereby the cause of action may be the subject of a disputed application for reinstatement, resulting in a trial on affidavit of the merits. This, in my view, is the course that should be avoided.
That is not to say that there will not be cases where it is appropriate for notice to be given to a third party, and an opportunity afforded to that third party to be heard on the application. If, for example, the result of the order for reinstatement would affect the rights of another, then clearly, notice should be given to that person. For example, an order may affect the rights or interests of former shareholders, directors or indeed former employees. An example is to be found in the case of Re Great Eastern Cleaning Services Pty Ltd.[6] In that proceeding, a company was struck off the register but the directors were not informed. The company continued its business for a number of years. It employed persons. It deducted taxation from the employees’ wages and hence incurred a liability for group tax. Eventually, the Commissioner of Taxation found out and made a claim against the person who was responsible for deducting the taxation, and sued that person personally in debt. If the company was reinstated, then the personal claim would have no basis in law. Needham J held that it was appropriate that notice should be given to the Deputy Commissioner of Taxation, and, in accordance with the then Supreme Court Rules of New South Wales, joined the Commissioner as a party. That is an example of where the result of the application would have affected the rights of the Commissioner of Taxation.
[6](1978) 3 ACLR 794.
I think it would be appropriate, also, as a general guideline, that if a judge formed the view on the material that it was proposed to sue the company, and the cause of action was hopeless, it may be appropriate to require notice to be given to the potential litigant. Examples of this would be where there is a clear defence, such as a limitation defence or some statutory defence. However, it would only be in the clearest of clear cases that that should happen. I reiterate that the proper venue for the cause of action to be heard and determined is a court or statutory tribunal. The parties will then have every opportunity to fight the case in a proper setting, to have the advantage of discovery, to test the other party’s case, and to properly present their cases.
Because the State had been granted leave to be heard before the Master, and because it was before the Court on the appeal, I reluctantly granted it leave to appear. Whilst I permitted the State to put submissions on the question of the foreshadowed cause of action, the amount of material and the many sets of written submissions on the topic demonstrated that the State did not have an unanswerable defence to the proceeding. Consistent with what I have stated, the State of Victoria should not have been granted leave to argue the point. Because ASIC opposed the reinstatement on the ground that none of the plaintiffs was a person aggrieved, I think in the circumstances that the State should not have been granted leave to appear. If the company is reinstated and sues the State of Victoria, the latter will have every opportunity to contest the proceeding in a proper forum. It is at that point that the State’s rights and duties are to be determined.
Section 601(AH)(2) of the Corporations Act 2001
Section 601(AH)(2) of the Act provides:
“601(AH) Reinstatement
Reinstatement by ASIC
(1)…
Reinstatement by Court
(2)The Court may make an order that ASIC reinstatement the registration of a company if:
(a)an application for reinstatement is made to the Court by:
(i)a person aggrieved by the deregistration; or
(ii)a former liquidator of the company; and
(b)the Court is satisfied that it is just that the company’s registration be reinstated.
(3)If the Court makes an order under sub-section (2) it may:
(a)validate anything done between the deregistration of the company and its reinstatement; and
(b)make any other order it considers appropriate.”
The Palais de Danse was registered in this State on 24 December 1926. It was deregistered on 21 February 1998.
It is clear from s.601(AH)(2) that if an application for reinstatement is made, it is necessary for the applicant to prove two matters, namely:
(i)that the application for reinstatement is made by a person aggrieved by the deregistration;
(ii)that it is just that the company’s registration be reinstated.
It is important to note the wording of sub-s.(2). First, the phrase “a person” is not defined or qualified in any way. Secondly, there is no time limit. These are two features of the modern legislation. Reference to the history of this provision shows that in the past, the legislation qualified the type of “person” who could bring the application, secondly, there was a time limit and, thirdly, it was not a question of the person being aggrieved, but rather it was a question of whether the person felt aggrieved by the company being struck off the register.
Section 7(5) of the English Companies Act 1880 gave power to the High Court in England to restore the name of a company to the register. The sub-section commenced:
“(5)If any company or member thereof feels aggrieved by the name of such company having been struck off the register in pursuance of this section, the company or member may apply to the Superior Court in which the company is liable to be wound up; and if such court is satisfied that the company was at the time of the striking off carrying on business or in operation, and that it is just so to do, may order the name of the company to be restored to the register.”
It is noted that in this early legislation, the applicant could only be the company or a member. Secondly, the company or member had to prove that it or he felt aggrieved by the deregistration and, further, it had to be proven that the company was, at the time of the striking off, carrying on business or in operation, “and that it is just so to do”. (Emphasis added.) It is noted that there was no time limit in that early legislation.
Similar wording appeared in the Companies Act of the Colony of Victoria in 1896. Section 161, however, extended the applicant to include a “creditor”, and it was not necessary to prove that it was just to order that the name be restored. This was an alternative to the Court being satisfied that the company was carrying on business or in operation at the relevant time.
The same provision is found in s.230(6) of the Companies Act 1928.
In the Companies Act of 1958, the same words were used, however, there was a time limit imposed of 15 years “after the name of the company has been struck off”.
In 1961, a new Companies Act was passed in this State. The description of who could apply was markedly widened. The new provision is s.308(6), which provided:
“(6)If any person feels aggrieved by the name of a company having been struck off the register, the Court on an application made by the person at any time within 15 years after the name of the company has been so struck off may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the name of the company be restored to the register, order the name of the company be restored.”
(Emphasis added).
It can be seen that any person who feels aggrieved may make the application. It is no longer confined to the company, a member of it, or a creditor. Further, it is noted that the Court must be satisfied at a particular time, namely, the time of the striking off, that the company was, inter alia, in operation, but importantly “or otherwise that it is just that the name be restored to the register”. It is arguable that the sub-section confined the factual matters which the Court had to be satisfied were in existence at the time of the striking off.
We then move forward to the Companies (Victoria) Code of 1982. Again, there is another important change. It is now no longer a question of the person feeling aggrieved. The question is whether the person is aggrieved. Otherwise, the provision was the same as the provision in the 1961 Act.
The history of the legislation has to be compared with the present form of the legislation.
There is now no longer any time limit. There is no wording in the provision which confines the Court to a consideration of the factual matters at the date of deregistration. There are two matters that have to be addressed and which I have stated above, namely, that the application is made by a person aggrieved by the deregistration, and that it is just that the registration be reinstated. The history of the legislation over a period in excess of 125 years supports a wide construction of the phrase “person aggrieved”, which is not restricted in time and, in particular, is not restricted to the events at the time of deregistration.
The phrase “person aggrieved” is not defined by the Act, but has been the subject of numerous cases.
As a general rule, the phrase should be given a wide application. In another context, in The Attorney‑General of the Gambia v N’Jie,[7] Lord Denning, speaking for the Privy Council, said:
“The words ‘person aggrieved’ are of a wide import and should not be subjected to a restrictive interpretation. I do not include, of course, a mere busybody who is interfering in things which do not concern him: but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interest.”
[7](1961) AC 617.
In National Trust of Australia v Australian Temperance,[8] the Full Court considered the expression “a person who feels aggrieved” at p.604 et seq. As the Court pointed out, the expression has been considered in respect of a variety of different legislative provisions. The Court adopted and applied what the Privy Council said in the Gambia case.
[8][1976] VR 592.
There is nothing in the Corporations Act 2001 which restricts the meaning of the phrase. What was said by the Privy Council has been applied in an application for reinstatement of a company. See Re Proserpine and Companies Act.[9]
[9][1980] 1 NSWLR 745.
The question arises whether a person can be aggrieved as a result of events which occur after the deregistration. In my opinion, there is nothing in the legislation which requires that the applicant must have been aggrieved at the time of the deregistration. Indeed, the history of the legislation, and in particular, the widening of the category of persons who could be aggrieved and, further, the removal of any time limit, supports that view. The actual words of the sub-section themselves do not restrict the application to the grievance being in existence at the date of deregistration. The sub-section requires a causal link between the grievance and the deregistration, but no temporal restriction.
My decision is supported by what Needham J held in Re Proserpine and Companies Act, supra. His Honour considered a case relied upon by the State of Victoria of Re New Timbiqui Gold Mines Ltd[10] and distinguished it because of the different terminology of the English Act and the New South Wales Act. His Honour was dealing with the 1961 New South Wales Act, and the wording of the sub-section was the same that contained in as the Victorian Act. His Honour said:[11]
“It seems to me, applying the principle enunciated by the Privy Council, that to hold that the applicant was not a person who felt aggrieved would be to subject the sub-section to a restrictive interpretation. I am of the opinion that the mere fact that the person’s real and direct interest in the decision to strike the company’s name off the register arose after the name had been struck off is not sufficient to deny him a right to make application under s308(5). There may be other circumstances coupled with that fact which require a decision that the person is not a proper applicant, but there are no such circumstances here. It is a factor to be considered, no doubt, that the application may be made ‘at any time within 15 years after the name of the company has been so struck off’.”
(Emphasis added).
[10][1961] 1 Ch 319.
[11]At p.749.
That was the position under the 1961 legislation, and the fact that the present legislation has no time restriction, in my view, reinforces that conclusion.
What his Honour said, in my respectful submission, is clearly correct. Applications for reinstatement have been granted in the past in circumstances where the person making the application, and who asserts that he is aggrieved by the deregistration, could not have been aggrieved by the deregistration at the time when it occurred. One only has to think of the mesothelioma cases. It is not difficult to state a set of facts which demonstrate the point. A person is employed in 1976 by an employer who is covered by compulsory insurance for industrial accident. The person is exposed to asbestos. Thirty years later, the person suffers from mesothelioma and the medical evidence supports the conclusion that the exposure to asbestos in the year 1976 was a cause of his condition. Let us add to that the fact that the employer was a company which was deregistered in 1977. The cause of action would not accrue until he actually suffered injury. This may be many years after the deregistration of the company. Application is made in the year 2006 to reinstate the company, not only to enable the applicant to have a legal entity to sue, but also to enable the applicant to take advantage of an insurance policy which the employer had at the relevant time. The courts have often reinstated the company for that purpose, although at the time of deregistration it could not be said that the applicant was aggrieved when the deregistration occurred.
There are cases which have discussed the phrase “a person aggrieved” in the context of a deregistration and an application for reinstatement, and counsel for the plaintiffs and the State of Victoria referred to a number of them. But in considering the authorities, it is important to note the particular words of the legislation in question. The words used are the primary source of the Legislature’s intention, and any change of wording is usually significant. Counsel for the State of Victoria submitted that there were authorities which showed that none of the plaintiffs was a person aggrieved, but merely that the plaintiffs were interlopers or busybodies who had no real grievance. Dr Pannam QC, who appeared with Mr S. Hopper of counsel for the plaintiffs, submitted that the sub-section was not to be interpreted as limiting the grievance to circumstances existing at the date of deregistration, and that the cases relied upon by the State were dealing with different wording in the legislation. Before considering the cases relied upon by the parties, it is necessary to state the relevant facts.
Facts – party aggrieved
In an affidavit sworn by Peter Mitrakas, solicitor for the plaintiffs, sworn 22 March 2006, the deponent has set out the factual matters which, it is submitted, show that the deregistration of Palaise de Danse has brought about a situation where the plaintiffs are aggrieved by the deregistration. It is necessary to briefly summarise the factual matters relied upon.
By Certificate of Title Volume 1206 Folio 473, the Governor of Victoria granted to Palais de Danse a lease for a term of 50 years commencing 1 April 1956 (“the lease”) over the demised premises situated in St Kilda. Certain transactions took place thereafter, but for all intents and purposes, the lessee was the Palais de Danse pursuant to the original lease.
By an agreement dated 12 December 1983, Palais de Danse assigned to Alamar Nominees Pty Ltd its right, title and interest in the lease. On 13 August 1984, a Certificate of Title was issued showing Alamar Nominees Pty Ltd as the holder of the leasehold estate over the demised premises, on the same terms and on the same conditions as the lease. On 21 October 1988, Cosmos Property Corporation Pty Ltd was registered as the proprietor of the lease and on 28 July 1992, Bradto was registered as the proprietor of the lease. As earlier stated, Bradto granted a number of sub-leases to Maztan Pty Ltd, and at present, Maztan Pty Ltd is currently the sub‑tenant. The lease has expired and the State of Victoria has brought an application in VCAT seeking an order for possession.
There are other matters which the plaintiffs rely on. On 10 February 2006, certain information came into the possession of the plaintiffs’ solicitors. The affidavit of Mr Mitrakas contains a summary of the documents, which traces an interesting history.
On 27 December 1968, a building known as the Palais de Danse, which was erected on the demised premises, was destroyed by fire. The question then arose as to what was to happen next. It was Crown land. The question was whether the building should be re-erected. On 13 March 1969, the Secretary for Lands of the Victorian Government wrote to Palais de Danse, referring to a previous letter and advising “that on completion of a new building at your estimated cost of $400,000 and on reinstatement of the Stardust Room, the Department would be prepared to seek the consent of the Governor-in-Council to a surrender of the existing lease and the issue of a new lease for a term of 60 years from now.” The letter went on to state a number of conditions. Palais de Danse sought legal advice, and its solicitors wrote to the State Government stating that their client wished to commence the rebuilding and asking whether, if it did so, it could go ahead “with the certainty that the new lease for 60 years will be issued to it when the boundaries of the area can be defined”. Further correspondence took place and then, in a letter dated 18 April 1969 from the Secretary for Lands to De Palais de Danse, appeared the following:
“Further to my letter of 11th April 1969, I now wish to advise that the Governor-in-Council has consented to a new lease being granted to your client Company in respect of Allotment 103 at St Kilda Parish of Melbourne South for a term of 60 years from a date to be determined on the condition that such new lease shall not be executed until such time as:-
(1)The lessee has expended not less than $400,000 on the erection of a new building on the demised premises;
(2)the lessee has reinstated the reception room and kitchen erected on the demised premises and recently damaged by fire;
(3)the boundaries of the demised premises have been re-defined having regard to the widening of Marine Parade at St Kilda;
(4)the lessee has complied with the statutory requirements of the Land Act 1958.
The necessary order in council has been obtained.
In regard to (4) above, your client company will be advised of statutory requirements when the other matters are finalised.”
On 15 April 1969, the Governor-in-Council approved, pursuant to the provisions of s.134 of the Land Act 1958, and consented to “the grant of a new lease for a term of 60 years from a date to be determined on the condition that such new lease shall not be executed until such time as”, and then the four conditions contained in the letter of 18 April 1969 were set out.
It is the contention of Bradto in the VCAT proceeding that it and the sub-tenant have an interest in the agreement to lease made on or about 15 April 1969, between the Crown and Palais de Danse Pty Ltd as the predecessor in title, as shown in the Order in Council approved by the Governor-in-Council, for a further term of 60 years.
Bradto maintains that it is entitled to defend the proceeding brought by the State at VCAT by proving that it has an equitable right, enforceable against the State of Victoria, in respect of the alleged agreement to lease. In order to establish that defence, it is not, in my opinion, necessary to reinstate Palais de Danse, which was the party, if the facts are proven, who had the benefit of that agreement for a lease. If the assignment made in 1982 transferred all the right, title and interest of Palais de Danse to the then assignee, and assuming that the later documents assigned the same rights, then it is not necessary for Palais de Danse to be reinstated as a legal entity in order for Bradto to raise that defence. That line of defence has been taken in the VCAT proceeding.
However, it is clear that there is another possible line of defence. Reinstatement is necessary to enable the occupiers to plead another defence. The evidence reveals that steps were taken to erect a new building on the demised premises. Mr K. Bromley, the manager of Palais de Danse, informed the Secretary for Lands by letter dated 1 October 1971 that the plans for construction were well underway. On 23 February 1972, the Secretary of Lands wrote to Palais de Danse and stated, inter alia, that in response to an earlier query, the parties should commence discussions on the new lease. The Secretary of Lands further noted there was no immediate urgency, and asked that it be left for a few weeks. Works were commenced and were well underway by 29 September 1972. The evidence reveals that the works were performed between early 1972 and August 1974, and that the total cost was $570,943.24.
In 1981, consultation took place between Mr Bromley and the Country Roads Board concerning the widening of Marine Parade, and the desirability of the Country Roads Board acquiring part of the demised premises. By letter dated 3 March 1982, the Country Roads Board informed Palais de Danse that the Governor‑in‑Council had approved the acquisition of land it required for the works of widening Marine Parade, and enclosed a Notice of Acquisition. Negotiations took place between the parties, and by letter dated 17 June 1982, Mr Bromley accepted on behalf of Palais de Danse the offer of the Country Roads Board to pay the sum of $832 for the land acquired. By 16 December 1982, the land had been transferred to the Country Roads Board.
In the VCAT proceeding brought by the State of Victoria, the defence and counterclaim put in issue a claim by Bradto for an interest in a longer lease resulting from the consent of the Governor‑in‑Council referred to in the letter of 18 April 1969, the Governor‑in‑Council approval of 15 April 1969, and the correspondence and events which occurred thereafter. The defence and counterclaim rely upon the respondent to the application establishing a valid assignment of the interest. As an alternative defence, Bradto wishes to take advantage of and enforce the agreement for a lease against the State of Victoria with respect to the 60 year lease. In order to enable the defence to be mounted, a deed was entered into on 24 December 2005 called a “Deed of Sale of Shares”. The parties to the agreement are –
Four groups of entities called vendors and Mr Pilarinos and/or nominee as purchaser. The vendors are Leslie Albert Hyams, Marilyn Betty Hyams Executor of the estate of Louis Joseph Hyams (deceased), Lefran Nominees Pty Ltd, and Malou Nominees Pty Ltd. The purchaser is Jerry Pilarinos and/or Nominee.
The recitals state that the vendors owned or held in trust a total of 20,000 shares issued in Palais de Danse Pty Ltd. Clause 4 of the agreement provides that the vendors agree to sell and the purchaser agrees to purchase the shares for a purchase price, which is defined as $100 at completion date, which in turn is defined as “the date being seven days from the date that the purchaser notifies the vendor in writing that the order has been made by the Court.” Term 2 requires the purchaser to make application to the Court to reinstate the company. The vendors consented to the purchaser making the application, and agreed that if necessary, the application will be made in the name of the vendors, and that the directors will give any reasonable assistance to the purchaser in respect to the application. The directors are defined as Leslie Albert Hyams and Marilyn Hyams as the executor of the estate of Louis Joseph Hyams.
The evidence reveals that at the date of deregistration, the said vendors were the registered proprietors of a total of 20,000 shares. It is said that Jerry Pilarinos is a person aggrieved by the deregistration on the bases that he has agreed to purchase the 20,000 shares in the Palais de Danse under the deed, that the company appears to have rights in respect to the demised premises, that the rights are valuable and are not dealt with in the winding up, and that he or his nominee will be entitled to the benefit of those rights or to a distribution of the proceeds of a sale of those rights upon completion of the provision of the deed. It is said that Leslie Albert Hyams, the second plaintiff, is aggrieved because he is shown as being a shareholder of the company prior to its deregistration and that in that capacity, and subject to the deed, he is entitled to the benefit of the rights held by the Palais de Danse or distribution from the sale of those rights. It is said that the third plaintiff, Bradto, is aggrieved because it is the nominated purchaser. By reason of clause 13 of the Deed of Sale of Shares, Mr Pilarinos as purchaser may, at least two days before the completion date, nominate a substitute or additional purchaser, and clause 13 sets out the procedure that is to be followed. On 1 February 2006, Mr Pilarinos executed a Notice of Nomination, and in accordance with the terms of clause 13, executed a deed of guarantee and indemnity and delivered the same to the vendors on or about 15 February 2006. The nominated substituted purchaser is Bradto Pty Ltd. By reason of clause 13.1, Mr Pilarinos is still personally liable for the performance of his obligations under the agreement, and the terms bind both he and the nominee jointly and severally.
By reason of clause 3.1 of the said deed, the former directors of Palais de Danse consented to the application for reinstatement before the Court.
At the time that the Palais de Danse was deregistered, it was as the result of the members’ voluntary winding up and was solvent.
Evidence has been given that on reinstatement of Palais de Danse, Mr Pilarinos and Bradto would immediately be the holders of the shares in Palais de Danse and new directors would be appointed, and that those steps would take place within a matter of 14 days of reinstatement. If necessary, some of the shares or all of the shares could be transferred into the name of Bradto.
The State of Victoria, through its solicitors, has filed two affidavits by Sally Jane Robinson, a solicitor employed by the Victorian Government Solicitor’s Office, sworn respectively on 3 April 2006 and 12 April 2006. In her first affidavit, in paragraph 34, Ms Robinson states that according to the documents which are produced, there was no agreement to a new or extended lease or a new lease between the Palais de Danse and the State of Victoria. It is asserted that the rental and terms and conditions were never agreed. Ms Robinson lists a number of documents and then states that from the title documents and searches available, she is able to state a number of facts. She has no direct knowledge of the factual matters revealed by the documents. Whilst I would expect that if the company is reinstated, the question of the rights of the company to a new lease of 60 years will depend very much upon documents, the fact is that the history of the matters which may be in dispute go back over some 37 years. Documents, whether they be correspondence or an agreement, are not construed in a vacuum. It is essential to consider the circumstances at the time. Words, when used in a document, must be considered in the matrix of facts surrounding the document and may assume a different meaning to a literal meaning. It is extremely difficult, on an application such as the present, on affidavit, to make findings of fact and to determine the law based purely on documents, when the parties may not at this stage know all relevant facts, the matters are not tested, and the parties may wish to place further material before the Court. I note what the Crown says. However, in my view, it is not open on this application to make an assessment of the chances of Palais de Danse or its assignee proving a case against the State of Victoria for a new lease of a term of 60 years.
The only thing I will say is that on the evidence before the Court, the case is by no means hopeless. Equity has always recognised an agreement for a lease, and representations made by a true owner to a prospective tenant which are relied upon by the tenant, who then changes his position, may establish an interest based upon the principle of proprietary estoppel. As the learned author of Snell’s Principles of Equity, 27th edition, says, strictly it is not an interest by estoppel. At p.565 appears the following:
“Proprietary estoppel is one of the qualifications to the general rule that a person who spends money on improving the property of another has no claim to reimbursement or to any proprietary interest in the property. Proprietary estoppel is older than promissory estoppel. It is permanent in its effect, and it is also capable of operating positively so as to confer a right of action. The term ‘estoppel’ though often used, is thus not altogether appropriate. It may well be that the equity is based on an estoppel, but it seems in essence to confer a substantive equitable right of property which is not registrable as the land charge.”
In Greasley v Cooke,[12] Lord Denning MR[13] pointed out that it was not necessary to prove that money was spent. He described the equity as follows:
“It is sufficient if the party, to whom the assurance is given, acts on the faith of it – in such circumstances that it would be unjust and inequitable for the party making the assurance to go back on it.”
[12][1980] 1 WLR 1306.
[13]At p.1311.
A person aggrieved
I have expressed my opinion that the wording of s.601(AH) does not restrict its application to circumstances existing at the date of deregistration, and can apply when the circumstances have occurred post deregistration, resulting in a person being aggrieved by it. Mr Garde QC, who appeared with Mr Fox of counsel for the State of Victoria, submitted that the case of In Re Timbiqui Gold Mines Ltd[14] is contrary to that conclusion. In that case, the Registrar of Companies struck the name of a company off the register. The petitioners at that date were neither members nor creditors of the company. In 1959, the first petitioner acquired a number of shares in the company, and in 1960, debts due from the company were assigned to both petitioners. An application was made to restore the name of the company to the register. It is important to note the terms of the English Companies Act of 1948, which gave the Court the jurisdiction. The legislation was similar to the legislation in this State at the time. Section 353(6) provided:
“If a company or any member or creditor thereof feels aggrieved by the company having been struck off the register, the Court on an application made by the company or a member or a creditor before the expiration of 20 years from the publication … , if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that the company be restored to the register, the name … be restored … .”
[14]Supra.
It is noted that the person aggrieved must be either a member or a creditor.
Buckley J held that in order to qualify as a “member or creditor” of a company within the meaning of the provision, the petitioner must show that he was a member or creditor of the company at the date when the company was dissolved. He found that the applicants were neither creditors nor members at the relevant time. He also went on to hold that if he was wrong in that conclusion, in his opinion, it was not a proper case in which the Court should exercise its discretion. In support of that conclusion he noted that the company had never prospered, that it was the subject of bankruptcy proceedings and that the evidence before the Court that some benefit might accrue as a result of the company being put back on the register, was not very forceful. He noted, having regard to the five years which had elapsed since the company was struck off the register, and the long period that had elapsed since the year 1940 when there was last effective control by directors, that the register of the company had been destroyed, that the shareholders consisted in the main of a very large number of small shareholders residing in France, and that the latest records of their identities and addresses was now 20 years old. He then posed this question, that the Court ought “to require more cogent evidence that some really substantial benefit would accrue to members and creditors of the company from the restoration of the company’s name to the register”. He therefore concluded as an alternative ground that he ought not, in the exercise of the Court’s discretion, restore the company’s name to the register.
At the top of p.327 of the report, his Honour adverted to another argument. But on a close analysis of what he said, his Lordship did not decide the case on that argument. It was asserted that the petitioners had acquired the shares and the debts after they had become aware that the company had been struck off. He referred to an argument put on behalf of the Registrar of Companies and noted that it had some force. Based upon those assumptions, his Lordship said:
“That no-one can say he is aggrieved by the company having been struck off the register if he subsequently acquired his shares or debt with the knowledge that the company had been struck off the register. It seems to me it would be impossible for such a person to say that he was aggrieved. He would, in fact, be an officious interloper who, with knowledge of the fact that the company has been struck off, chooses to buy his shares or acquire the debt in the hope that he can get something out of it. Such a person, in my judgment, could not genuinely be said to be aggrieved by the company having been struck off the register.”
(Emphasis added).
It is noted that his Lordship was of the view that the applicant had to have a genuine grievance.
His Lordship’s comments were obiter dicta. The facts did not support the assumptions. He decided the case on the alternative ground, on the basis of the exercise of his discretion.
Returning to the first ground of his decision, which was relied upon as a decision that should be applied to the present legislation, his Honour noted that the only persons who could make the application were members or creditors. He observed that the company having gone out of existence there is no-one who can be a member of a company which no longer exists. Further, nobody could become a creditor after the company had ceased to exist because as his Lordship said:
“One cannot become a creditor of a non-existent debtor.”
His Lordship then went on to observe that the sub-section involved a degree of make‑believe and the question was how far it ought to be carried. His conclusion is summed up as follows:[15]
“On the whole, I think that the right way to approach this sort of problem of construction is to adopt that interpretation which would give a working effect to the sub-section without extending the operation of inference or imagination further than is necessary for that purpose. Although I think the point is a difficult one, I reach the conclusion that, in order to qualify to be a petitioner under this sub‑section, the petitioner must show that, at the date when the company was dissolved he was a member or a creditor; and that anyone who, whether in ignorance of the dissolution of the company or otherwise, purports to become a member or creditor of the company afterwards is not a member or creditor within the sub‑section.”
(Emphasis added).
[15]At p.326.
It is very clear that his Lordship was very much influenced, as indeed he was obliged to be, by the wording of the sub-section, that is, that it was confined to “a member or a creditor”. It is not difficult to comprehend his conclusion.
In my view, the case is clearly distinguishable from the present situation. The present legislation does not restrict the person who may make an application by any qualification and accordingly, in my view, the decision does not support Mr Garde’s argument.
In Proserpine Pty Ltd and the Companies Act, supra, Needham J held that the Companies Legislation of 1961 was different to the English legislation and he held that the reasoning of Buckley J could be distinguished because of the terms of the English section. I respectfully agree with him.
In addition, Dr Pannam relied upon the Scottish case of Conti v AIP Private Bank Ltd,[16] which was a decision of the Extra Division of three judges. The legislation under consideration by the Court in that proceeding was closer to the English legislation dealt with by Buckley J than the Australian provision.
[16][2000] SLT 1015.
Section 653(2) of the Companies Act 1985 gave jurisdiction to the Court on the application “by the company or the member or creditor” before the expiration of 20 years from the publication of the Notice of Striking Off, to order that the company be restored to the register. Sub-s.(1) is in these terms:
“(1)Sub-section (2) applies if a company or any member of creditor of it feels aggrieved by the company having been struck off the register under s.652.”
It is noted that the phrase was “feels aggrieved” and, further, that an applicant must be either the company, a member or a creditor. The facts have some similarity to the present case. The applicant had been a member and director of the company and he had, with the authority of the company’s board, applied to strike it off the register. The company had acted in a fiduciary capacity and, after its dissolution, an issue had arisen between two foreign companies as to the validity and import of certain rights, which had been held by the company subject to a suspensive condition. The condition was satisfied after the dissolution. The issue was the subject of foreign arbitration proceedings and it was thought that restoration of the company to the register might influence the conclusion of those proceedings. The application was resisted by one of the foreign companies on the ground, inter alia, that the applicant could not be a person aggrieved by the striking off and was thus not qualified to seek restoration. The application was dismissed at first instance by the Lord Ordinary, who held that the section required a person to have been aggrieved at the time of the striking off, and that it was clear that the applicant had not been aggrieved at that time. The appeal was allowed and the Court ordered that the company should be restored to the register.
At p.1017, Lord Prosser stated that the first issue was “as to the date at which such a grievance must exist for the purposes of s.653(1).” He noted that at first instance, the judge held that a person could not be aggrieved unless he was aggrieved at the time of the deregistration.
His Lordship considered the arguments and the provision and noted that the bare fact of striking off was unlikely to constitute a grievance, and that a grievance would flow from a combination of striking off and other circumstances. He noted there could be prior circumstances and then he said:
“But as regards subsequent or emergent circumstances, it would always be for the Court to decide whether the relationship between the striking off and those circumstances was such that it would be proper to say that the petitioner in question was aggrieved ‘by’ the company having been struck off. For that to be a correct description of the situation, it was not essential for the striking off to be the last relevant event to occur.”
He held that, in his opinion, it was not necessary to show that the grievance was one limited to “a consideration of the situation as it was at the date of striking off.”
His Lordship distinguished the case which was relied upon by the counsel for the State of Victoria, namely, Re New Timbiqui Gold Mines Ltd.[17] The two other members of the Division agreed with Lord Prosser.
[17]Supra.
Mr Garde in the alternative sought to rely upon what Buckley J said[18] about the “officious interloper who, with knowledge of the fact that the company had been struck off”, had purchased shares and acquired a debt in the hope that he could get something out of it. However, that observation was not a basis for his Lordship’s decision in the alternative. His alternative ground was that in the circumstances – and the facts were stated by him – he thought it inappropriate to exercise the Court’s discretion in favour of restoration. It will, however, be necessary to consider further his Lordship’s reasoning when considering what is the important question, and that is whether any of the plaintiffs is a “person aggrieved”.
[18]At p.327.
The phrase “a person aggrieved” is not defined by the legislation. However, that phrase or a similar phrase has been in company law legislation for many, many years.[19]
[19]See Companies Act (1896) s.161.
I am satisfied that there is nothing in the section or in the context of the Act which limits the fact of aggrievement to the person being aggrieved at the time of the deregistration. The cases demonstrate that reinstatements have been ordered in the past even though the fact of being aggrieved did not take place until well after the deregistration. This is made clear by the example I have already given relating to a mesothelioma‑type case.
In my opinion, the question of whether or not a person is aggrieved is to be determined at the date of the hearing. If the fact that the company remains deregistered would cause grievance to a particular person or entity, then, in my view, the person or entity who brings the application is an aggrieved person. In my opinion, the questions for determination are:
As at the date of the application, do the facts show that the applicant is aggrieved by the deregistration? If yes, is the grievance genuine, real and not merely theoretical, petty or fanciful?
If the answer to the latter question is also yes then, in my opinion, the person is an aggrieved person within the meaning of s.601(AH)(2) of the Act.
This approach accords with what Burt CJ said in the Western Australian case of Ronald William Turner v Commissioner of Corporate Affairs.[20] The learned judge had this to say at p.2 of the judgement:
“The application to reinstate is opposed by the Commissioner, first on the ground that it is said that Turner is not a person aggrieved within the meaning of sub-s.(2) of s.459. He stands in relationship to the company in a number of ways. He is a director of it in the first instance. I am told, although it does not appear in the affidavit, that he was and may still be the secretary of it. He is also a shareholder in a company Majestic Management Pty Ltd, which holds some 72,000 shares in the company as trustee for a family trust of his. In addition to that he is a guarantor of a debt owed by the company to a money lender and the probability is that if the company is permanently struck off it will incur liability under that guarantee.
In my opinion all of those matters when considered together, and perhaps any one of them when considered separately, will be enough to establish that he was a person aggrieved. A person is aggrieved, I think, when you can see that he will suffer or may well suffer financial loss by the fact of the company being struck off. I do not think that you should attempt to construe that expression in any technical way. It is simply a question of looking at the facts and asking whether the person who is making the application has a genuine interest in maintaining it. Certainly I think Turner would satisfy that description.”
(Emphasis added).
[20]Unreported decision delivered 27 May 1987.
What his Honour said was quoted with approval by the Full Court of Western Australia in the decision of Salter v NCSC.[21]
[21](1988) 13 ACLR 253 at 258.
In GIS Electrical Pty Ltd v Melsom,[22] the Full Court of Western Australia considered what was meant by the words “person aggrieved” and there is a helpful summary of the cases at pp.492-494. Judges in the past have sought to define the phrase. For example, some judges have referred to the word “aggrieved” as connoting some legal grievance, while others have described it as being a person who is injured or damaged in a legal sense, or being a person who had “a real and direct interest in the decision and is dissatisfied with it”. Burt CJ referred to a person who will suffer or may suffer “financial loss”.
[22](2002) 43 ACSR 481.
There is nothing in the provision or the Act which leads to the conclusion that it was the intention of the Legislature that the grievance must be of a particular type. What is important is that there is a causal link between the deregistration and the grievance. The fact that judges in the past have differed in their opinion as to the nature of the grievance demonstrates, in my respectful opinion, that it is fraught with danger to speculate as to the legislative intent that the grievance must be qualified in a way as, for example, being a financial grievance or a legal grievance.
Adopting what the Privy Council said in the Gambia case, supra, the phrase should not be given a restrictive interpretation. While I respectfully agree with the judgment of Burt CJ, I would not confine the grievance to a financial loss. The words have an every day meaning and are not difficult to apply to a set of facts. If, after considering the facts relied upon, the conclusion is that the person is aggrieved by the deregistration in a way which is genuine and real, and not merely theoretical, petty or fanciful, then that person does satisfy the test that he is a person aggrieved. In my opinion, to seek to restrict the grievance to a particular type by some formula would defeat the legislative intention. The question is, on the facts as proven, is the person aggrieved by the deregistration?
Mr Garde relied upon the observations of Buckley J concerning the “officious interloper”. His Lordship’s observations were not necessary to his decision. But I have difficulty with his Lordship’s reasoning. The mere fact that one knows that a company has been deregistered and enters into an agreement acquiring a valuable right, does not mean that that person is not aggrieved thereafter by the company being deregistered. I do not see how it can be said that he does not have a genuine grievance, even though the conduct which brought the grievance into play occurred post-deregistration and as a result of steps taken by the person. I would not confine the word “aggrieved” to any particular set of circumstances, other than to say that in considering the facts, the grievance must be real, genuine and not merely theoretical, petty or fanciful.
Applying those principles, in my view, each of the first and third plaintiffs is an aggrieved person. The first plaintiff and the third plaintiff have a common interest and wish to be able to enforce an equitable right against the State of Victoria, namely, an agreement for a lease for 60 years. They will acquire the right by the deed of sale of shares upon reinstatement. They would be entitled to seek to enforce that if the company is reinstated. They say on that simple ground that if the company remains deregistered, they are aggrieved by that fact. The deregistration deprives them of the valuable right which they claim and which they seek to prove. In my view, their grievance is genuine and real.
On the other hand, I do not think that Mr Lesley Hyams is a person who is aggrieved because of the deregistration. The deed of sale of shares would result in him receiving a proportion of $100. He gains no other benefit under the deed of sale of shares and, further, there are terms in the deed which seek to ensure that he is not in any way involved or liable after the company is reinstated. In my view, the loss of something less than $100 could not be described as a real loss so that it could be said that he is a person aggrieved by the deregistration. Dr Pannam submitted that one should not focus on the amount at stake, but rather should consider the question if he was to receive a substantial consideration, for example, $1m. I think, with all due respect to Dr Pannam, that the argument lacks substance. If there was a substantial consideration involved in the deed of sale of shares, then one might readily infer that Mr Hyams was a person aggrieved by the deregistration. He could not be said to be genuinely aggrieved by a financial loss of something less than $100 if the company remains deregistered.
Just that company be reinstated
No argument was put to the Court that if the Court came to the view that any of the plaintiffs was a person aggrieved within the meaning of the sub-section, it would not in the circumstances be just that the company’s registration be reinstated. Indeed, in my view, it follows, once the Court comes to the view that the first and third plaintiffs are persons aggrieved by the deregistration, in that there is a valuable right which each wishes to establish in a court or tribunal, that in the circumstances it would be just that the company’s registration be reinstated.
Discretion – futility
The Court does have a discretion to refuse reinstatement. An example of the exercise of the discretion is the decision of Buckley J in the New Timbiqui Gold Mines Ltd case, where his Honour held that if he was wrong in relation to the date when a person must be aggrieved, in the exercise of the discretion he would not reinstate the company. He gave a number of reasons, for example, the company had never prospered, it was the subject of bankruptcy proceedings in the country in which all of its assets existed, five years had passed, a very long period had elapsed since there was any real control by the directors, and it would be difficult to identify the large number of small shareholders.
Counsel on behalf of the State of Victoria contended that the Court should, in the exercise of its discretion, refuse to reinstate the company because the proposed action by the company to enforce a right, namely, that it had a lease for 60 years, was doomed to fail.
The question of whether the proposed action was doomed to fail is a question which involves complex factual matters, and inferences that are to be drawn from the factual matters. Some of the facts and some of the inferences are very much disputed between the parties and involve reasonably complex questions of law. It is not appropriate in those circumstances for this Court to attempt to determine the likely outcome of any proceeding. That is best left to a Court hearing. Some of the matters raised are “fact sensitive” and it is inappropriate to attempt to resolve those on affidavit material. Mr Garde also raised the question of the proceeding being statute barred and also precluded by laches. The interest claimed is an equitable one. This involves interesting questions relating to limitations and, further, laches is a matter that is fact sensitive.
I am not prepared to dismiss this application on the ground that any proposed proceeding may be futile. For reasons earlier stated, I do not think, on the material before the Court, that one could say that the proceeding is hopeless.
In addition, the State argued that the Court should, in its discretion, in any event refuse the order for reinstatement, and many of the matters relied upon were relied upon on the question of whether the plaintiffs were persons aggrieved. Reference was made to the fact that Mr Pilarinos and Bradto knew that the company had been deregistered when the share sale agreement was entered into. I have already dealt with that. Further, it was argued that any action by Palais de Danse was a speculative one. Again, that merely repeats the other discretionary factor relied upon. It was also emphasised that Palais de Danse has been out of possession of the land and business for 23 years, that its former shareholders and directors have no interest in occupying the land, and that the dealings in the land since 1983 are totally inconsistent with the Palais de Danse having any interest in the land, separate from that which was sold to Alamar. These latter matters go to the question of the cause of action. Further, it was submitted that the dealings are contradicted by the interest which Palais de Danse asserts, and that it has never asserted a separate interest in the past. Again, however, those two matters are matters which can be raised in any court proceeding. It is asserted that Palais de Danse was wound up on the footing that it did not have such an interest, but the mere fact that somebody may have overlooked the interest does not seem to me to be a basis for refusing the relief. It is further stated that Palais de Danse has no assets to pursue such interest, but if I might say so, with respect, that fails to take into account what will happen, namely, that the company will acquire assets in order to pursue the interest.
Further, it is said that the trial of any proceeding will cover events that occurred over many years and that the trial will be based almost exclusively on documentary evidence. However, that may or may not be correct and it does not seem to me to be a basis for refusing the relief. Finally, the State raised the question of the State being sued by an insolvent body, and the question of litigation costs. Reference was made to what Young CJ in Equity observed in Casali v Crisp[23], where his Honour observed that reinstatement would permit an insolvent company to mount speculative litigation with little prospect of financial reward at the end of the day. I note what his Honour said, but his Honour’s comments do not apply in the present matter. I do not believe that is speculative litigation. The State will have whatever is available to it to seek to protect itself against costs orders. VCAT can make an order for security for costs.[24]
[23](2001) 165 FLR 79 at [46].
[24]See s.79 of the VCAT Act.
In my opinion, there are no discretionary grounds for refusing the relief sought.
Conclusion
I find that the first and third plaintiffs are aggrieved persons within the meaning of s.601(AH)(2) of the Corporations Act 2001, that it would be just that the company Palais de Danse Pty Ltd’s registration be reinstated and that there are no grounds for exercising the discretion against the relief sought. It follows that the appeal must be allowed. I will hear the parties on the question of appropriate orders giving effect to the reinstatement, and the question of costs.
---
52
3
0