Re Rosaub Pty Ltd

[2005] NSWSC 689

Reported Decision: 54 ACSR 371

New South Wales

Supreme Court

CITATION:	Rosaub Pty Ltd [2005] NSWSC 689
HEARING DATE(S):	11/07/05
JUDGMENT DATE :	13 July 2005
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
DECISION:	Order under s.509(6)

CATCHWORDS:	CORPORATIONS - winding up - voluntary winding up - deregistration following filing of liquidator's final return - considerations relevant to exercise of court's discretion to defer deregistration - power to order deregistration "on a specified day" - whether day ascertained by reference to uncertain event is a "specified day"
LEGISLATION CITED:	Corporations Act 2001 (Cth), s.509
CASES CITED:	Application of Walker (as liquidator of SC Australia Pty Ltd) [1999] NSWSC 176 Deputy Commissioner of Taxation v Bettina House of Fashion Pty Ltd (unreported, VSC, 18 November 1988) Esanda Finance Corporation Ltd v Lancaster (unreported, WASC, 20 December 1990) Kerol Pty Ltd v Vergeld Engineering Pty Ltd (unreported, SASC, 30 April 1998) Re Karounos; Ex parte Official Trustee in Bankruptcy (1989) 25 FCR 177 Stores v Austra Tanks Pty Ltd (unreported, NSWSC, 8 August 1988)
PARTIES:	Rosaub Pty Limited (in liquidation) - Plaintiff
FILE NUMBER(S):	SC 3906/05
COUNSEL:	Mr J.T. Johnson - Plaintiff
SOLICITORS:	Watson Mangioni - Plaintiff

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

WEDNESDAY, 13 JULY 2005

3906/05 ROSAUB PTY LIMITED (IN LIQUIDATION)

JUDGMENT

1 By an originating process filed in court on Monday last, 11 July 2005, Rosaub Pty Limited, a company in liquidation, seeks an order deferring its deregistration. In the absence of such an order, deregistration and consequent dissolution of the company will occur on 18 July 2005.

2 The winding up is a creditors’ voluntary winding up. It followed on from voluntary administration under Part 5.3A of the Corporations Law as previously in force. That administration commenced in August 1995. One of the liquidators, Mr Shirlaw, deposes to having convened the final meeting of the creditors and members on 4 March 2005. The meeting was convened pursuant to s.509(1) of the Corporations Act 2001 (Cth) which is in the following terms:

“As soon as the affairs of the company are fully wound up, the liquidator must make up an account showing how the winding up has been conducted and the property of the company has been disposed of and, when the account is so made up, he or she must convene a general meeting of the company, or, in the case of a creditors' voluntary winding up, a meeting of the creditors and members of the company, for the purpose of laying before it the account and giving any explanation of the account.”

3 Mr Shirlaw in due course reported to ASIC, by means of lodgment of Form 523 dated 18 April 2005, that the final meeting had been convened but no quorum had been achieved. Attached was the liquidators’ account required by s.509(1). By operation of s.509(4), this lodgment was tantamount to lodgment of a return of the holding of a meeting under s.509(3), so that s.509(5) came into effect:

“ASIC must deregister the company at the end of the 3 month period after the return was lodged.”

4 The effect of this provision may be modified pursuant to s.509(6):

“On application by the liquidator or any other interested party, the Court may make an order that ASIC deregister the company on a specified day. The Court must make the order before the end of the 3 month period after the return was lodged.”

5 The current application is expressed to be an application under s.509(6). It is, in terms, an application by the company itself rather than by the liquidators but I do not think that that matters. The company should be regarded as an “interested party” for s.509(6) purposes when the question of its own deregistration is in issue, even if an application by the company at the instigation of its liquidators is not properly treated as an application by the liquidators themselves.

6 The application is made in circumstances where the liquidators have had reason to review their initial opinion that the affairs of the company have been fully wound up. On or about 8 June 2005, they received a letter from solicitors for Australia and New Zealand Banking Group Limited alerting them to the possibility that the company may have an interest in moneys recoverable under the HIH Claims Support Scheme. That potentiality arises from events of 1997 in which the company, under the control of its liquidators, borrowed money from ANZ for litigation funding purposes. HIH Casualty & General Insurance Limited issued an “Insolvents Legal Expenses Indemnity Policy” in respect of the borrowing. The persons named as insured in the policy are the company and ANZ.

7 Mr Shirlaw says in his affidavit that, when the opinion was formed that the affairs of the company had been fully wound up, he was aware of this insurance policy but did not think that any recovery could be made under or by reference to it. It was not until receipt of the letter from ANZ’s solicitors in June 2005 that the possibility of some recovery under the HIH Claims Support Scheme was recognised. Mr Shirlaw’s understanding is that, because both ANZ and the company are named as insureds in the relevant HIH policy, further pursuit of the possibility of recovery through the scheme (already initiated by ANZ) must be by both the company and ANZ together.

8 When he came to appreciate these matters, Mr Shirlaw had the liquidators’ solicitors write to ASIC asking that deregistration pursuant to s.509(5) be deferred. ASIC replied that it had no power to defer. The solicitors then gave ASIC notice of an intended application under s.509(6). ASIC’s response was that it would not oppose any such application.

9 The precise order now sought is:

“An order that the deregistration of Rosaub Pty Limited (in Liquidation) (ACN 003 990 127) (‘the Company’) be deferred until 30 January 2007 or deferred until 14 days after notification to the liquidators of the Company that the Company’s claim under the HIH Claims Support Scheme has been accepted, whichever is the earlier.”

Two questions arise: first, as to the substantive merits of the application and, second, as to the precise nature of the court’s power, having regard to the words “on a specified day” in s.509(6).

10 In relation to the substantive question, the legislation does not seek to define or qualify the court’s discretion except in a timing sense (in that an order under s.509(6) can only be made before the end of three months after the lodgment of the s.509(3) return or, as here, the s.509(4) return). Case law provides little guidance as to considerations relevant to the exercise of the discretion. Judge Burley, a Master of the Supreme Court of South Australia, dealing with an earlier version of s.509(6) in Kerol Pty Ltd v Vergeld Engineering Pty Ltd (unreported, SASC, 30 April 1998) expressed the opinion that the discretion is properly exercised where “the continued existence of the company is necessary in order to effect some proper purpose”. To like effect is the decision of Austin J in Application of Walker (as liquidator of SC Australia Pty Ltd) [1999] NSWSC 176 where an order was made because, if deregistration was not deferred, certain persons “would suffer a loss to which there is no particular reason to subject them”.

11 Applications of the kind now before me are, in my view, to be distinguished from cases under s.601AH in which the court is asked to re-create (or, more precisely, direct the re-creation of) companies which have gone out of existence. That, of its nature, is a more radical process than mere deferral of the time at which an existing company’s existence will come to an end. Its more radical nature is recognised by the legislation which, in s.601AH(2), allows the court to order reinstatement only if it is satisfied that reinstatement is “just”. Section 509(6), as I have said, expresses no criterion – but in saying this I do not intend for a moment to imply that the court could make an order if it did not think it just to do so; merely that, having regard to the statutory language, a greater degree of latitude is envisaged. The court may be inclined to be less strict in a case of deferral of deregistration than in a case of re-creation.

12 I am satisfied that, if some apparently beneficial purpose will, according to the evidence, be served by a deferral, the deferral should be granted, particularly where it is the liquidator who puts forward the need for deferral. Creation of an opportunity to explore fully the possibility of further and hitherto unrecognised avenues of recovery for the benefit of the administration must, of its nature, represent such a beneficial purpose.

13 There is an obvious statutory intention that the court should have regard to some particular proposal not only in deciding that an extension of time should be granted but also in fixing the further time. Its power is to order that deregistration be effected by ASIC “on a specified day” and that that day should thereby be substituted for the day fixed by s.509(5). The court must therefore form a view as to the amount of time appropriately required. That is something that can be judged only by reference to particular circumstances. Pursuit of the possibility of recovery from the HIH Claims Support Scheme is the relevant matter in this case.

14 The form of order now sought (expressed, as it is, in the alternative) raises a question as to the meaning of “a specified day”. A fixed date (such as 31 December 2005 or 1 January 2006) is, clearly enough, a “specified day”. So too is a day precisely identified otherwise than by its date (such as “Good Friday 2006”) and, perhaps, a day described by reference to some past and identifiable event, such as “the first anniversary of the date of acceptance” of an identified offer made in the past: Esanda Finance Corporation Ltd v Lancaster, (unreported, WASC, 20 December 1990, per Malcolm CJ). In some contexts, “there may be the sufficient specification of a period by reference, not to a definite point of time, but to the occurrence of an ascertainable event”: Re Karounos; Ex parte Official Trustee in Bankruptcy (1989) 25 FCR 177 per Sheppard J.

15 But I do not think that the day on which a future event is to happen (or a day that is a fixed number of days after it) can be said to be a “specified day”, where the event is one that may not eventuate. This is particularly so in the present context where s.509(6) and the court’s order combine to make up the directive to ASIC to put the company out of existence. That is something that cannot be allowed to be in any way uncertain. The court must ensure that, where the three month period under s.509(5) is displaced, its order leaves no doubt on the question what ASIC is to do, in a timing sense, by way of deregistration.

16 The conclusion I have reached as to the need for specificity in relation to a substituted date imposed by the court under s.509(6) is supported by the observation of Marks J in Deputy Commissioner of Taxation v Bettina House of Fashion Pty Ltd (unreported, VSC, 18 November 1988) in relation to a similar provision of the Companies (Victoria) Code that “any period of suspension should be certain and a date of postponement specified in any order granting it”. The conclusion is also supported by the brief judgment of Young J in Stores v Austra Tanks Pty Ltd (unreported, NSWSC, 8 August 1988). His Honour said of the analogous provision of the Companies (New South Wales) Code:

“Although the point does not seem to have been the subject of any previously decided case, in my view, the clear words of the section mean that the court has to specify a date and cannot merely extend the time until the litigation referred to has been completely disposed of.”

17 In that case, the date fixed by the court’s order for dissolution was some three and a half years after the making of the order. Young J reserved to the court further consideration to vary that order on the application of either the plaintiff (the claimant against the company in the relevant litigation) or the liquidator, if the litigation should be concluded earlier. For my own part, I cannot see how any subsequent order of the kind thus contemplated could be in any way effective, given that it could not on any basis be said to meet the specification in s.509(6) that an order fixing a date other than that set by s.509(5) be made within three months after lodgment of the liquidator’s return. A similar time limit applied under the legislation considered by Young J.

18 Mr Shirlaw deposes that he has been informed by the solicitors for ANZ who have been handling the claim under the HIH Claims Support Scheme that it may take up to eighteen months to finalise that matter. This is why 30 January 2007 is the first alternative in the form of order sought. That the application is cast in those terms must mean that the liquidators are willing to remain in office until that date. The fact that the alternative specified in the form of order will become relevant only if it turns out to be earlier than 30 January 2007 means that that fixed date is judged by the liquidators to leave sufficient time for all necessary matters to be attended to. For reasons I have stated, however, it is not possible to include in the order the alternative and accelerating feature sought: the day which is fourteen days after notification to the liquidators of acceptance of the claim under the scheme is an uncertain day which may never arrive. It is therefore not a “specified day” and a s.509(6) order cannot be made by reference to it. In the circumstances, the order will specify 30 January 2007 only. Nor, for reasons stated, do I think it productive to incorporate into the order some form of reservation contemplating the possibility of an accelerating order at some future time.

19 The orders of the court are as follows:

1. Order pursuant to s.509(6) of the Corporations Act 2001 (Cth) that Australian Securities and Investments Commission deregister Rosaub Pty Limited on 30 January 2007.
2. Order that costs of the originating process be costs and expenses of the winding up of Rosaub Pty Limited.
3. Direct that these orders be entered forthwith.
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