Re Newfront Pty Ltd (deregistered) - [2008] SASC 127

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
In the Matter of NEWFRONT PTY LTD (DEREGISTERED) (ACN 053 228 489)
[2008] SASC 127
Reasons for Decision of The Honourable Justice Gray
12 May 2008
CORPORATIONS - FORMATION - REGISTRATION OR INCORPORATION - DEREGISTRATION
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - DISSOLUTION - RESTORATION OF DEFUNCT COMPANY TO REGISTER
Application for order that ASIC reinstate registration of defendant company pursuant to s 601AH(2) Corporations Act 2001 (Cth) – defendant company deregistered by ASIC pursuant to s 601AB Corporations Act – applicant sought consent judgment against defendant company in other proceedings – reinstatement of defendant company was required to enter consent judgment – consideration of effect of deregistration and reregistration – whether applicant ‘a person aggrieved’ by deregistration – whether ‘just that defendant company be reinstated’.
Held (allowing the application): applicant was a person aggrieved by deregistration and it was just that defendant company be reinstated – ASIC directed to reinstate defendant company.
Corporations Act 2001 (Cth) s 601AB; s 601AD(1); s 601AH(2); s 601AH and 601AH(5), referred to.
Application of Stojic; Re Belbron Pty Ltd (2006) 24 ACLC 844; Arnold v Poltane Pty Ltd [2005] FCA 1418; Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688; Beckton v Australian Securities and Investments Commission [2007] NSWSC 780; Callegher v Australian Securities and Investments Commission (ASIC) (2007) 239 ALR 749; CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd (2006) 201 FLR 296; Ealing Corporation v Jones [1959] 1 QB 384; GIS Electrical Pty Ltd v Melsom (2002) 172 FLR 218; Krstevska v ACN 010505012 Pty Ltd (2002) 20 ACLC 292; Piccoli Tesori Pty Ltd (Deregistered); Ex parte Bertuol (2006) 151 FCR 109; Promnitz v Australian Securities and Investments Commission (2004) 22 ACLC 108; Re GA & RJ Elliot Pty Ltd; ex parte Mitcham (1978) 3 ACLR 523; WorkCover Authority (NSW) v Picton Truck & Trailer Repairs Pty Ltd (2004) 51 ACSR 102, considered.

In the Matter of NEWFRONT PTY LTD (DEREGISTERED) (ACN 053 228 489)
[2008] SASC 127
Civil
GRAY J.

This is an application for an order that the Australian Securities and Investments Commission (“ASIC”) reinstate the registration of a company, pursuant to section 601AH(2) of the Corporations Act 2001 (Cth).
Introduction
The application concerns the reinstatement of the registration of Newfront Pty Ltd (Deregistered) ACN 053 228 489 (“Newfront”). Newfront was deregistered by ASIC on 13 January 2008, pursuant to section 601AB of the Corporations Act.[1] It appears that the deregistration was a result of Newfront having failed to pay an annual fee.
[1] Section 601AB relevantly provides:
“(1)ASIC may decide to deregister a company if:
(a)the response to a return of particulars given to the company is at least 6 months late; and
(b) the company has not lodged any other documents under this Act in the last 18 months; and
(c) ASIC has no reason to believe that the company is carrying on business.
(1A)ASIC may also decide to deregister a company if the company’s review fee in respect of a review date has not been paid in full at least 12 months after the due date for payment.”
The application for reinstatement has been brought by the applicant, Grenfell Securities Ltd. The applicant is also a plaintiff in Supreme Court proceedings (Action No. 404 of 2005) which have been brought against, inter alia, Newfront, who is the third defendant in those proceedings (“the earlier proceedings”). On 1 April 2008 the earlier proceedings were settled, and a consent to judgment was filed by Newfront in favour of the applicant in an amount of $214,485.37, together with interest and costs to be agreed or taxed.
On 2 April 2008, the solicitors for the applicant undertook a search of the ASIC Company Extract for Newfront, which revealed that the company had been deregistered on 13 January 2008. On 3 April 2008, the applicant applied to reinstate Newfront. The purpose of the application was to allow the consent judgment to be entered against Newfront in the earlier proceedings. On 4 April 2008, a letter was received by the solicitors for the applicant from ASIC, which indicated that ASIC would not oppose the application for reinstatement provided that certain procedural conditions were met.
On 7 April 2008, I heard argument on the application for reinstatement in the within proceedings and the application for a consent judgment in the earlier proceedings. I formed the view that Newfront should be reinstated, and I made an order directing that ASIC reinstate the company. I declined at that time to enter the consent judgment on the basis that it was inappropriate to make an order against a non-existent entity. I indicated to the parties that following the reinstatement of Newfront I would enter the consent judgment in the absence of the parties. On 16 April 2008, Newfront was formally reinstated by ASIC pursuant to my order of 7 April 2008. On 29 April 2008 I entered the consent judgment.
At the hearing on 7 April 2008, I reserved the right to publish reasons in relation to my decision to reinstate Newfront. I now publish my reasons.
Legal Principles
Pursuant to section 601AD(1) of the Corporations Act,[2] a company ceases to exist following deregistration. As a consequence of the loss of legal personality, the company cannot commence legal proceedings,[3] and no proceedings can be commenced against the company.[4] Pursuant to section 601AH(5)[5] of the Corporations Act, if a company is reinstated it is taken to have continued in existence as if it had not been deregistered.
[2] Section 601AD(1) provides:
“(1)A company ceases to exist on deregistration.
Note:Despite the deregistration, officers of the company may still be liable for things done before the company was deregistered.”
[3] Arnold v Poltane Pty Ltd [2005] FCA 1418.
[4] Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688.
[5] Section 601AH(5) provides:
“(5)If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.”
The applicant seeks to invoke the Court’s power of reinstatement pursuant to section 601AH of the Corporations Act. Section 601AH relevantly provides:
(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.
(3)     If the Court makes an order under subsection (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.
As was recognised by Austin J in Australian Competition and Consumer Commission v Australian Securities and Investments Commission,[6] section 601AH raises two main issues for consideration. First, whether the applicant is a “person aggrieved by the deregistration”, and secondly, whether the court is satisfied that it is “just that the company’s registration be reinstated”. If positive findings are made on these two matters, in the ordinary course an order for reinstatement will be made.[7]
[6] Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 at [23].
[7] CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd (2006) 201 FLR 296 at [6] citing WorkCover Authority (NSW) v Picton Truck & Trailer Repairs Pty Ltd (2004) 51 ACSR 102.
“Person Aggrieved”
The expression “person aggrieved” is an expression of wide import and is to be construed liberally.[8] It has been recognised that a person aggrieved may be a person who has been damaged or injured in a legal sense – that is, a person who has a legal grievance.[9] The test is satisfied if an applicant’s legal rights have been affected by the deregistration, and if it has a genuine grievance that the dissolution has affected its interests.[10] In GIS Electrical Pty Ltd v Melsom,[11] Steytler J (with whom Templeman and Miller JJ agreed), conducted a review of the relevant authorities and observed:
[8]    Piccoli Tesori Pty Ltd (Deregistered); Ex parte Bertuol (2006) 151 FCR 109 at [20]; GIS Electrical Pty Ltd v Melsom (2002) 172 FLR 218 at 230-231.
[9]    See eg. Callegher v Australian Securities and Investments Commission (ASIC) (2007) 239 ALR 749 at [50]; Ealing Corporation v Jones [1959] 1 QB 384 at 391; Re GA & RJ Elliot Pty Ltd; ex parte Mitcham (1978) 3 ACLR 523 at 525.
[10]   Krstevska v ACN 010505012 Pty Ltd (2002) 20 ACLC 292 at [11] citing Re Proserpine Pty Ltd & the Companies Act [1980] 1 NSWLR 745 and Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688.
[11] GIS Electrical Pty Ltd v Melsom (2002) 172 FLR 218 at [54]-[56], [58], [61].
In Attorney-General of Gambia v N'Jie [1961] AC 617 at 634, the Privy Council (Lords Radcliffe, Denning and Guest) said:
“The words ‘person aggrieved’ are of wide import and should not be subjected to a restrictive interpretation. They 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 interests.”
Earlier, in Ealing Corporation v Jones [1959] 1 QB 384, Donovan J said (at 392):
“I think it is true that if one came to the expression without reference to judicial decision one would say that the words ‘person aggrieved by a decision’ mean no more than a person who had had the decision given against him; but the courts have decided that the words mean more than that, and have held that the word ‘aggrieved’ is not synonymous in this context with the word ‘dissatisfied’. The word `aggrieved' connotes some legal grievance, for example, a deprivation of something, an adverse effect on the title to something, and so on.”
Similar tests have been applied in Australia. In Re G A and R J Elliot Pty Ltd; Ex parte Mitcham (1978) 3 ACLR 523, Young CJ said (at 525):
“The expression ‘person aggrieved’ and similar expressions are, of course, very familiar. They have given rise to many authorities: see Stroud's Judicial Dictionary, 4th ed, vol 1 at 89-94. Speaking generally a person aggrieved is I think a person who is injured or damaged in a legal sense or who has suffered a legal grievance: see Ex parte Sidebotham; Re Sidebotham (1880) 14 Ch D 458 in the judgment of James LJ (at 465), although as the Privy Council said in Attorney-General of Gambia v N'Jie [1961] AC 617 at 634, the dictum of James LJ in that case is not to be regarded as exhaustive.”
…
In Northbourne Developments, McClelland J (at 437-438), quoted what had been said by James LJ in Ex parte Sidebotham; Re Sidebotham (at 465) in respect of s 71 of the Bankruptcy Act 1869 (UK) as follows:
“ ... but the words ‘person aggrieved’ do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made. A ‘person aggrieved’ must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.”
…
More recently, in Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688, Austin J, applying Re Proserpine Pty Ltd[1980] 1 NSWLR 745, found that the applicant in that case was a person aggrieved because its legal rights had been affected and because it had a genuine grievance that the dissolution had affected its interests (at [24]-[26]).
I respectfully agree with Steytler J’s analysis.
“Just that the Company’s Registration be Reinstated”
The expression “just that the company’s registration be reinstated” is broad, and confers a wide discretion on the court.[12] In Promnitz v Australian Securities and Investments Commission,[13] Goldberg J discussed the exercise of the discretion:
The requirement that the Court be satisfied that it is just that the company’s registration be reinstated is not constrained by any particular criterion. However, the cases make it clear that there are a number of matters which ought to be taken into account, namely the circumstances in which the company came to be deregistered, the future activities of the company if an order be made and also whether any particular person is likely to be prejudiced by the reinstatement. See for example, Re Kilkenny Engineering Pty Ltd (In Liq) (1976) 13 SASR 258; Drysdale v Australian Securities Commission (1992) 10 ACLC 1427; Re Steelmaster Pty Ltd (In Liq); Kenny v McCann (1992) 10 ACLC 176; Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688.
[12] Krstevska v ACN 010505012 Pty Ltd (2002) 20 ACLC 292 at [12]; Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 at [27].
[13] Promnitz v Australian Securities and Investments Commission (2004) 22 ACLC 108 at [19].
I respectfully agree with Goldberg J’s observations.
Consideration of the Application
In this case, as a result of deregistration the applicant has been deprived of its right to recovery from Newfront, which would take effect on the entering of the consent judgment. That is enough to bring the applicant within the category of a “person aggrieved”.[14]
[14] Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 at [24]-[26].
Further, it appears that the deregistration of Newfront was triggered by a procedural default or oversight.[15] There is no opposition to the reinstatement and there is no suggestion that anyone will be prejudiced by the reinstatement. In these circumstances, it is just that Newfront’s registration be reinstated.
[15] See eg. Callegher v Australian Securities and Investments Commisions (ASIC) (2007) 239 ALR 749; Beckton v Australian Securities and Investments Commission [2007] NSWSC 780; Application of Stojic; Re Belbron Pty Ltd (2006) 24 ACLC 844.
Conclusion
Having regard to the foregoing reasons I concluded that Newfront’s registration should be reinstated and I made orders that:
-the Australian Securities and Investments Commission reinstate the registration of Newfront Pty Ltd ACN 052 228 489;
-the applicant serve a copy of this order on the Australian Securities and Investments Commission so that Newfront Pty Ltd be reinstated; and
-the applicant notify the former officeholders of Newfront Pty Ltd of this application and order.