Re Dreampoint Pty Ltd (Deregistered)
[2024] WASC 125
•15 APRIL 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE DREAMPOINT PTY LTD (DEREGISTERED); EX PARTE BRETT PHILLIP JONES [2024] WASC 125
CORAM: MASTER RUSSELL
HEARD: 10 APRIL 2024
DELIVERED : 10 APRIL 2024
PUBLISHED : 15 APRIL 2024
FILE NO/S: COR 55 of 2024
MATTER: IN THE MATTER OF DREAMPOINT PTY LTD (DEREGISTERED)
EX PARTE
BRETT PHILLIP JONES
Plaintiff
Catchwords:
Corporations - Application to reinstate deregistered company - Application by director to reinstate deregistered company so liquidator may be appointed - Remission of director's penalty notice if company 'begins to be wound up' - Whether plaintiff is a 'person aggrieved' - Whether 'just' to reinstate deregistered company - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 459A, s 459P, s 465A, s 467(3), s 532(9), s 601AH(2)
Supreme Court (Corporations) (WA) Rules 2004, r 5.5(2), r 5.5(3)(a), r 5.6
Result:
Application granted
Order for reinstatement of registration of deregistered company
Order that company be wound up on reinstatement
Category: B
Representation:
Counsel:
| Plaintiff | : | L Christensen |
Solicitors:
| Plaintiff | : | CX Law |
Cases referred to in decision:
Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission [2021] WASC 235
Low as liquidator of Safa Auto Parts Pty Ltd v Australian Securities and Investments Commission [2024] WASC 116
Perrin v Australian Securities and Investments Commission [2024] WASC 38
Re Stojic [2006] NSWSC 608
The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247
MASTER RUSSELL:
(This judgment was delivered extemporaneously on 10 April 2024 and has been edited from the transcript to correct matters of grammar and to include complete references.)
Introduction
Dreampoint Pty Ltd (ACN 139 950 959) (deregistered) (Dreampoint) was deregistered by the Australian Securities and Investments Commission (ASIC) on 6 August 2023.
The plaintiff, Brett Phillip Jones, was a director of Dreampoint at the time it was deregistered.
On 28 March 2024, director's penalty notices were issued to Mr Jones by the Australian Taxation Office (ATO), signed by the Deputy Commissioner of Taxation, under s 269-25 in Sch 1 to the Taxation Administration Act 1953 (Cth), in respect of Dreampoint's liability for PAYG withholding and GST for the period 1 March 2019 to 30 June 2021. The director's penalty notices require him to pay the outstanding amounts totalling approximately $218,000 or to cause them to be remitted within 21 days after the date of the notice. That is, by 18 April 2024.
Relevantly, the penalty in respect of each unpaid amount of Dreampoint's liability will be remitted if Dreampoint begins to be wound up (within the meaning of the Corporations Act 2001 (Cth) (Act)) by that time.
Mr Jones applies, by originating process filed on 8 April 2024, for orders, as more particularly expressed in the minute of proposed orders filed on 10 April 2024, that:
(a)pursuant to s 601AH(2) of the Act, ASIC reinstate the registration of Dreampoint;
(b)upon the reinstatement of Dreampoint's registration, Dreampoint be wound up in insolvency pursuant to s 459A of the Act;
(c)Simon Roger Coad of c/- Ticcidew, 463 Scarborough Beach Road, Osborne Park, Western Australia, be appointed as liquidator of Dreampoint for the purpose of its winding up; and
(d)pursuant to s 467(3) of the Act, compliance with service, notification and advertising requirements under s 465A of the Act and r 5.6 of the Supreme Court (Corporations) (WA) Rules 2004 (Rules) relating to the application to wind up Dreampoint be dispensed with.
In support of the application and orders sought, Mr Jones relies on an affidavit sworn by him on 8 April 2024 and affidavits of Nerida Jane Smith sworn on 9 and 10 April 2024. A written outline of submissions was also filed on his behalf on 8 April 2024, which has since been superseded by a substituted outline of submissions filed on 10 April 2024.
A certificate of urgency was filed on 8 April 2024 seeking that the application be heard and determined before 18 April 2024, the date by which the amounts stated in the director's penalty notices must be paid or remitted.
ASIC has been served with the originating process and the plaintiff's affidavit in support and has been given notice of the hearing.[1] A copy of the plaintiff's substituted outline of submissions dated 10 April 2024 has also been served on ASIC.[2] The ATO has also been served and given notice of the hearing.[3]
[1] Affidavit of Nerida Smith sworn 9 April 2024 [4] - [5], NS2 (First Smith Affidavit).
[2] Affidavit of Nerida Smith sworn 10 April 2024 [4] - [5], NS4 (Second Smith Affidavit).
[3] First Smith Affidavit [2] - [3], NS1; Second Smith Affidavit [2] - [3], NS3.
ASIC has not given notice to the plaintiff's solicitors or to the court that they wish to be heard on the application. The ATO has informed the plaintiff's lawyers it does not intend to attend the hearing.
The evidence and relevant factual background
The following factual background is derived from the affidavits filed in support of the application.
Mr Jones caused Dreampoint to be registered by ASIC on 12 October 2009.[4] The ASIC company extract records that he was a director of Dreampoint from 1 November 2009 until 5 April 2013 and from 12 March 2019 until deregistration on 6 August 2023.
[4] Affidavit of Brett Phillip Jones sworn 8 April 2024 (Jones Affidavit) [3], BJ1 (company extract).
Dreampoint has a paid-up share capital of $1. Mr Jones' wife, Marie McCrystal-Jones, was Dreampoint's sole shareholder since 11 May 2020, when she acquired that share from Skyglow Nominees Pty Ltd, which acquired the share on 17 June 2014.[5]
[5] Jones Affidavit [7], BJ1.
Dreampoint became the trustee of the E Unit Trust (Trust) pursuant to the terms of a unit trust deed dated 1 December 2009.[6] Dreampoint traded only as trustee of the Trust, which was used to conduct a hair salon business in the city of Perth under the name of House of Ernest.[7]
[6] Jones Affidavit [9], BJ3.
[7] Jones Affidavit [9] - [11].
Mr Jones deposes that during 2020 the turnover and profitability of the business was significantly affected by the Covid pandemic. Dreampoint received Government support to pay wages, but accumulated PAYG and GST debts which were allowed by the ATO. Mr Jones deposes to the business losing customers as a result of periods of closure and customers not coming into the city. The debts incurred were such that the business was unable to generate sufficient funds to trade and the business ceased operating in August 2022.[8] It appears that Dreampoint was deregistered by ASIC due to failures by Dreampoint relating to lodgement and payment of fees because of its impecuniosity.[9]
[8] Jones Affidavit [11].
[9] Jones Affidavit [12].
Mr Jones deposes that Dreampoint has no assets and, based on his knowledge of Dreampoint's affairs, it has the following creditors:
(a)the ATO, in the amount of approximately $218,000;
(b)Coty Australia Pty Ltd, in the amount of $109,035.81;
(c)Mr Jones' wife, Marie McCrystal-Jones, in the amount of $316,587;
(d)Skyglow Nominees Pty Ltd (deregistered), in the amount of $110,000; and
(e)Cre8 Awaken Pty Ltd (of which Mr and Mrs Jones are directors, and Mrs Jones is the sole shareholder), in the amount of $6,667.
Attached to Mr Jones' affidavit are copies of the last financial statements prepared in relation to Dreampoint, which are for the period ending 30 June 2021.[10] Those accounts disclose that Dreampoint's total liabilities exceeded its total assets. Though, any assets as of the date of deregistration vest in ASIC.
[10] Jones Affidavit [13], BJ4.
Though the business operated through Dreampoint and the Trust ceased trading, no steps have been taken by Mr Jones before now to wind up the company in the knowledge that it was insolvent.
Dreampoint's liabilities include its tax liabilities, as referred to in the amount of approximately $218,000. It is that liability that is the subject of the director's penalty notices issued to Mr Jones on 28 March 2024.
Mr Jones applies for the orders sought on the basis he says he is a 'person aggrieved' by Dreampoint's deregistration because he is 'now being pursued' for Dreampoint's debts to the ATO. This is a reference to the director's penalty notices issued to him on 28 March 2024. He seeks an order for ASIC to reinstate Dreampoint's registration and an order that, upon reinstatement, Dreampoint be wound up in insolvency so that the amounts the subject of the penalty notices are remitted before 18 April 2024 to relieve him of his liability as a director.
Simon Roger Coad of Ticcidew Pty Ltd provided his written consent to act as liquidator of Dreampoint in a letter dated 8 April 2024 attached to Mr Jones' affidavit.[11] He has subsequently confirmed his consent to act as liquidator of Dreampoint in the prescribed form, as required under s 532(9) of the Act and r 5.5(2) and r 5.5(3)(a) of the Rules.[12]
[11] Jones Affidavit [16], BJ6.
[12] Consent of Liquidator filed 10 April 2024.
Mr Jones has agreed to pay $15,000 plus GST to Mr Coad towards the costs of Dreampoint's liquidation.[13]
[13] Jones Affidavit [16], BJ7.
Application to reinstate deregistered company ‑ s 601AH of the Act
Pursuant to s 601AH(2) of the Act, where a company has been deregistered, the court may make an order that ASIC reinstate the company's registration if the conditions required by the Act are met. Relevantly, s 601AH(2) states:
(2)The Court may make an order that ASIC reinstate 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.
I refer to and incorporate my summary of the principles applicable to an application under s 601AH of the Act in Low as liquidator of Safa Auto Parts Pty Ltd v Australian Securities and Investments Commission,[14] in which I respectfully adopted Hill J's summary in Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission.[15]
[14] Low as liquidator of Safa Auto Parts Pty Ltd v Australian Securities and Investments Commission [2024] WASC 116 [17] ‑ [18].
[15] Jit Sun Investments Pte Ltd (Singaporean Unique Entity Number: 200308432W) v Australian Securities and Investments Commission [2021] WASC 235 [5] - [8].
It is submitted, in effect, on Mr Jones' behalf that he is a person aggrieved because:
(a)Dreampoint ought not have been deregistered and it ought to have been wound up;
(b)as Dreampoint is deregistered, he is unable to begin to wind it up and remit its liability for the PAYG withholding and GST; and
(c)he faces personal liability for the debts claimed by the ATO under the director's penalty notices issued in relation to Dreampoint's unpaid tax liabilities.
It is also submitted that there is further utility in making the order sought for Dreampoint's registration to be reinstated, given it is proposed to expose the affairs of the company to examination by a liquidator, which is in the public interest.
In Perrin v Australian Securities and Investments Commission,[16] Strk J considered whether a person in similar circumstances to the plaintiff in this case, and issued with director's penalty notices by the ATO, was a person aggrieved and whether it was just to order the reinstatement of a deregistered company for the purpose of s 601AH(2). I refer to and respectfully adopt Strk J's summary of relevant authorities. Her Honour made orders in that case for the registration of the deregistered company to be reinstated, though in that case to facilitate the director winding up the company by creditor's voluntary winding up. Otherwise, it was to similar effect and for a similar purpose. That is, to remit the company's liability the subject of director's penalty notices.
[16] Perrin v Australian Securities and Investments Commission [2024] WASC 38 (Perrin).
In Re Stojic,[17] White J made orders for reinstatement under s 601AH(2) and, upon reinstatement, an order that the company be wound up in insolvency. In the circumstances of this case, as outlined, and applying the rationale adopted by White J in Re Stojic[18]and Strk J in Perrin, I am satisfied that Mr Jones is a person aggrieved by Dreampoint's deregistration. I accept that he has standing to bring the application under s 601AH(2).
[17] Re Stojic [2006] NSWSC 608.
[18] Re Stojic [2006] NSWSC 608 [13] ‑ [18].
Neither the ATO nor ASIC has sought to oppose the application. I do not consider that the public interest will be undermined by granting the relief sought.
In the circumstances, I am satisfied that it is just to make an order that Dreampoint's registration be reinstated.
Application for an order that Dreampoint be wound up upon reinstatement
On the evidence before me, Dreampoint was insolvent at the time it was deregistered because its total liabilities exceeded its total assets and it was unable to discharge its debts. That will also be the position upon Dreampoint's reinstatement.
The proposed liquidator, Mr Coad, has given his consent to act in the required form, and there is evidence before me that he will be put in funds by Mr Jones for his fees for conducting the liquidation.
For the reasons stated, I consider it is appropriate to make an order that, upon its reinstatement, Dreampoint be wound up in insolvency under s 459(1)(d) of the Act on application of the plaintiff (as a director of Dreampoint), and Mr Coad to be appointed as its liquidator, for the purpose of its winding up.
I accept the plaintiff's submissions to the effect that it is appropriate, in the circumstances of this application, to exercise my discretion under s 467(3) of the Act and dispense with the notice and advertising requirements under s 465A of the Act and under r 5.6 of the Rules.
This is also consistent with the authorities in relation to applications involving a combined reinstatement and winding up, which provide it would be appropriate for the court to order such dispensation when no useful purpose would be served by insisting on those requirements.[19]
[19] See for example The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247 [95], and the authorities referred to.
The legislative purpose of the requirements is to ensure that those who are potentially affected by a winding up application have sufficient notice of it. ASIC and the ATO have been served with notice of the applications and the hearing.
To balance the dispensation of notice and the short notice given to ASIC and the ATO of the applications and the hearing, though the ATO has indicated it did not intend to attend, a copy of the orders made should be served on each of those parties.
Conclusion and orders
For these reasons, the plaintiff's application is granted and I make the following orders.
1.Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act), the Australian Securities and Investments Commission reinstate the registration of Dreampoint Pty Ltd (ACN 139 950 959) (Deregistered) (Dreampoint).
2.Upon the reinstatement of Dreampoint's registration, Dreampoint be wound up in insolvency pursuant to s 459A of the Act.
3.Simon Roger Coad of c/- Ticcidew, 463 Scarborough Beach Road, Osborne Park, Western Australia, be appointed as liquidator of Dreampoint for the purpose of its winding up.
4.Pursuant to s 467(3) of the Act, compliance with service, notification and advertising requirements under s 465A of the Act and r 5.6 of the Supreme Court (Corporations) (WA) Rules 2004 relating to the application to wind up Dreampoint be dispensed with.
5.A copy of these orders is to be served on the Australian Securities and Investments Commission and the Australian Taxation Office.
6.The plaintiff and the parties referred to in order 5 (and any other interested party) have liberty to apply to the Court to vary or discharge these orders or for directions.
7.No order as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AM
Associate to Master Russell
15 APRIL 2024
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