Riveria Hotels Pty Ltd v Stalwart Holdings Pty Limited - [2012] WADC 100

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: RIVERIA HOTELS PTY LTD -v- STALWART HOLDINGS PTY LIMITED [2012] WADC 100

CORAM: REGISTRAR KINGSLEY

HEARD: 14 FEBRUARY 2012

DELIVERED : 29 JUNE 2012

FILE NO/S: CIV 853 of 2011

BETWEEN: RIVERIA HOTELS PTY LTD
Plaintiff
AND
STALWART HOLDINGS PTY LIMITED
First Defendant
DAVID JOHN GIBBINS
Second Defendant
DEIDRE CAROLYN GIBBINS
Third Defendant

Catchwords:

Practice - Company deregistration - Subsequent re-registration - Effect on proceedings

Legislation:

Corporations Act 2011

Result:

The proceedings have continued as if the company has been in existence the entire time

Representation:

Counsel:

Plaintiff:     No appearance
First Defendant             :     Mr T Darbyshire
Second Defendant         :     Mr T Darbyshire
Third Defendant           :     Mr T Darbyshire

Solicitors:

Plaintiff:     Not applicable
First Defendant             :     Kott Gunning
Second Defendant         :     Kott Gunning
Third Defendant           :     Kott Gunning

Case(s) referred to in judgment(s):

Astaire Pty Ltd v Cavanagh (Unreported, WASC, Library No 6601, 27 January 1987, 23 February 1987)
Foster Yates & Thom Ltd v H W Edgehill Equipment Ltd (1978) 122 SJ 860, CA
Jekos Holdings Pty Ltd v Australian Horticultural Finance Pty Ltd 121 FLR 362
OZ-US Film Productions Pty Ltd (in liq) v Heath [2001] NSWSC 298
Silverstone Holdings Pty Ltd v American Home Assurance Code (1997) 18 WAR 516
Total Eden Pty Ltd v Pipeline Properties Pty Ltd (1990) 8 ACLC 1075

REGISTRAR KINGSLEY: Riveria Hotels Pty Ltd (Riveria) filed an endorsed writ on 16 March 2011 claiming the balance of the purchase price pursuant to a written agreement dated 7 May 2009. In April 2011 Riveria filed a statement of claim where its cause of action was pleaded out.
On 6 July 2011 the matter came before a registrar on a directions hearing and it was ordered that Riveria file and serve any amended statement of claim by 27 July 2011. Thereafter by 10 August 2011 the defendant was to file and serve a defence and any counterclaim. The direction hearing was adjourned to 31 August 2011.
At the 31 August 2011 hearing, the matter was adjourned until 28 September 2011 and the requirement for the defendant to file and serve a defence was suspended until further order. At the 28 September 2011 hearing the defendants were required to file and serve a defence and any counterclaim by 19 October 2011.
By letter dated 11 October 2011 the defendants' solicitor wrote to the court advising that Riveria was deregistered on 14 August 2011 pursuant to s 601AB Corporations Act 2011 (Cth). The defendants' solicitor stated in the letter that, as a consequence of the deregistration, the defendant would not be filing a defence and any counterclaim by 19 October 2011.
It would appear that Riveria has been reinstated pursuant to s 601AH(1) Corporations Act (see letter 23 January 2012 from the defendants' solicitors to Ms M Poon, Property Law Group, ASIC).
The defendants' solicitor sought the relisting of the directions hearing to argue that the re‑registration of Riveria resurrected the proceedings. Defendants' counsel's argument is that upon re‑registration the proceedings continue as if nothing had happened; that fresh proceedings do not have to be commenced.
The matter was adjourned and counsel for the Australian Securities and Investment Commission (ASIC) was invited to appear as amicus curiae. That invitation was declined.

Discussion

Section 601AB Corporations Act details the circumstances in which the ASIC may deregister a company. Section 601AD Corporations Act provides for the effect of deregistration. Put simply the company ceases to exist (s 601AD(1)). On deregistration, all of the company's property vests in ASIC and ASIC has all the powers of an owner over that property (s 601AD(2) and (4)).
Section 601AH(1) provides that ASIC may reinstate the registration of a company if ASIC is satisfied that the company should have not been deregistered. Section 601AH(5) provides:
If a company is reinstated the company is taken to have continued any 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 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 plain the company takes the property subject to that interest or claim.
The conventional wisdom suggests that the dissolution – and in my opinion there is no relevant difference between a dissolution referred to in the Company's Act a deregistration under the Corporations Act – of a corporate plaintiff causes the proceedings to abate and become a nullity. A convenient starting point is Total Eden Pty Ltd v Pipeline Properties Pty Ltd (1990) 8 ACLC 1075 applying the case of Astaire Pty Ltd v Cavanagh (Unreported, WASC, (Master Seaman QC), Library No 6601, 27 January 1987, 23 February 1987). In both Total Eden and Astaire the plaintiff company had a cause of action against the defendant and instituted proceedings. In each case the plaintiff company was in existence at the time of the issue of the writ.
In Astaire's case Master Seaman refused an application to substitute another company for the dissolved company. Master Seaman considered that upon dissolution of the plaintiff company the proceedings became a nullity and could not be saved by substitution. In coming to that view Master Seaman followed Morris v Harris [1927] AC 252.
In Total Eden Master Bredmeyer followed Astaire and stated that the proceedings abated on the dissolution of the plaintiff company, and cannot now be cured by substitution of another plaintiff.
Defendants' counsel drew to my attention the comments by Master Seaman QC in Astaire where he stated:
I did not have the benefit of argument as to what, if anything, could be done by the defendants to recover their costs of the proceedings up to the date of the dissolution of the plaintiff, or as to the effect which the dissolution has on those proceedings, mainly, do they become such a nullity as to be incapable of revival if the reinstatement of the company were ordered pursuant to s 459(6) of the Company's Code.
There is authority for the proposition that any action which a company brought before its dissolution was absolutely at an end and could not be revived after its dissolution (Foster Yates & Thom Ltd v H W Edgehill Equipment Ltd (1978) 122 SJ 860, CA).
Under the Corporations Act 2001 the position is now somewhat different. Section 601AH Corporations Act provides that when the registration of a company is reinstated the company has taken to have continued in existence as if it had not been deregistered. Thus a company in that position may institute proceedings in respect of a cause of action arising before its deregistration (Silverstone Holdings Pty Ltd v American Home Assurance Code (1997) 18 WAR 516).
In Silverstone the company was reinstated and on the day of reinstatement the writ was issued for a cause that pre-dated the dissolution. White J, with whom Kennedy J concurred, was of the opinion that the authorities of Astaire and Total Eden were not of direct relevance but in any event those authorities must be considered in light of the provisions of s 574(2) Corporations Law (now s 601 Corporations Act). As White J states [521]:
In my opinion, the effect of the reinstatement of the company to the register pursuant to the provisions of s 574(2) of the Corporations Law is that the appellant is deemed to have at all material times being the trustee of the family trust and of the property trust, as though it had never been deregistered. Accordingly, while that section did not, in terms, work a reappointment of the appellant, such reappointment was not necessary in view of the deeming provision of the section.
In Jekos Holdings Pty Ltdv Australian Horticultural Finance Pty Ltd 121 FLR 362 McKenzie J dealt with an application by a plaintiff company to set aside orders made in favour of the defendant company which was dissolved at the time of the application. The defendant company had obtained orders striking out a statement of claim. The defendant company then had been reinstated to the register pursuant to s 574(2) of the Corporations Law.
The plaintiff company sought to have the summons set aside on the ground that the defendant company had been dissolved at the time. This summons was dismissed. McKenzie J noted, citing authority, that the effect of a provision that the company should be 'deemed to have continued in existence as if its name has not been struck off 'was not only that the corporate existence of the company was preserved but it was also retroactive so that at the date of the hearing of the application the company was to be regarded as never having being dissolved'.
McKenzie J was of the opinion that the reinstatement of the company together with the words 'the company shall be deemed to have continued in existence as if its registration had not been cancelled had the effect of curing any lack of capacity on the part of the company and any consequential defect in the proceedings'.
OZ-US Film Productions Pty Ltd (in liq) v Heath [2001] NSWSC 298 is a proceeding where the defendant sought an order, amongst others that the statement of claim be set aside or, alternatively, an order that service of the statement on the defendants be set aside because proceedings were instituted whilst the plaintiff was deregistered. The plaintiff had been deregistered but subsequently reregistered. Master McLaughlin stated (71):
Accordingly, the Plaintiff, having been reinstated, must since 15 December 1997 be deemed to have continued in existence throughout the entire time during which it was deregistered, including the time when the present proceedings were instituted. Thus the order of 15 December 1997 has the effect of retrospectively validating any proceedings or activity initiated or performed by the Plaintiff between dissolution and reinstatement. (See Silverstone Holdings Pty Ltd v American Home Assurance Co (1997) 18 WAR 516). In particular, and in the circumstances of the instant case (where, as here, a company is deregistered whilst being a party to court proceedings, but achieves re-registration before it is removed from those proceedings), the proceedings continue unaffected, even if they were temporarily irregular during the period while the company was deregistered (see Jekos Holdings Pty Ltd v Australian Horticultural Finance Pty Ltd (1994) 121 FLR 362; Lidio Excellence Pty Ltd v Cincotta (1998) 28 ACSR 389).

Conclusion

In my opinion, having regard to the authorities of Jekos, and OZ-US in particular, the proceedings have continued in existence. As the plaintiff is deemed to have continued in existence throughout the period during which it was deregistered so do the proceedings. According, in my opinion these proceedings have continued as if the company has been in existence throughout the entire time.
I will hear counsel on the appropriate orders having regard to my decision.