Romaro and Pikachu v Australian Securities and Investments Commission
[2024] WASC 276
•8 AUGUST 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ROMARO and PIKACHU PTY LTD -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2024] WASC 276
CORAM: LUNDBERG J
HEARD: 1 AUGUST 2024
DELIVERED : 8 AUGUST 2024
FILE NO/S: COR 57 of 2024
BETWEEN: TERRY STEPHEN ROMARO
First Plaintiff
PIKACHU PTY LTD
Second Plaintiff
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Defendant
Catchwords:
Corporate law - Application to reinstate a deregistered corporation pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) - Purpose of application is to permit plaintiffs to commence proceedings against the corporation - Relevant limitation period for causes of action expired - Consequential orders sought to suspend running of limitation period - Whether plaintiffs are a 'person aggrieved' - Whether 'just' to reinstate the deregistered corporation - Whether limitation period should be suspended - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 601AD, s 601AG, s 601AH(2), s 601AH(3)
Limitation Act 2005 (WA), s 13
Result:
Application granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | T M Clavey |
| Second Plaintiff | : | T M Clavey |
| Defendant | : | No appearance |
Solicitors:
| First Plaintiff | : | Blackwall Legal LLP |
| Second Plaintiff | : | Blackwall Legal LLP |
| Defendant | : | No appearance |
Case(s) referred to in decision(s):
ACN 009 009 072 Pty Ltd (in liq) v Australian Securities and Investments Commission [2022] WASC 221
Allianz Australia Insurance Ltd v Mercer [2014] TASFC 3
Chalker v Clark [2008] VSCA 92
Del Borrello v Australian Securities and Investments Commission [2008] WASC 48
Hutchinson v Australian Securities and Investments Commission [2001] VSC 465; (2001) 167 FLR 90
Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [2021] WASC 235
Low v Romaro [2023] WASCA 155
Mervyn Jonathan Kitay as liquidator of ACN 009 009 072 Pty Ltd v Chaucer Syndicates Ltd (CRN 184915) as managing agents for Chaucer Syndicate 1084 [2021] WASC 450
Pagnon v Workcover Queensland [2000] QCA 421; [2001] 2 Qd R 492
Re Deputy Commissioner of Taxation; in the matter of James Hardies Australian Finance Pty Ltd [2008] FCA 1181; (2008) 248 ALR 557
Re Regional Planners Developments Co Pty Limited [2015] NSWSC 1996; (2015) 110 ACSR 457
Table of Contents
A. Introduction
B. Preliminary matters
Materials relied on for the purposes of the Application
Service of the Application on ASIC
Service of the Application on interested parties
C. Legislative framework and relevant principles
Legislation
Relevant principles - general
Relevant principles - suspension of limitation periods
D. Factual background
Background
Changes in insurance policies
The Insurance Proceedings
The plaintiffs' lawyers
Procedural steps in the Insurance Proceedings
Intention to sue Silverfield
E. Disposition
Person aggrieved
Should Silverfield be reinstated
Suspension of the limitation period
F. Conclusion and orders
ATTACHMENT A Visual Chronology of Relevant Events
LUNDBERG J:
A. Introduction
These reasons relate to the plaintiffs' application for the reinstatement of Silverfield Nominees Pty Ltd (Silverfield) pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act), and for consequential orders pursuant to s 601AH(3) of the Act (the Application). The Application is made by way of the amended originating process filed on 30 May 2024. These proceedings were initially commenced on 10 April 2024.
Silverfield was deregistered on 4 August 2021. It was formerly an incorporated legal practice that traded under the name and style of Park Legal Solutions. Silverfield represented the plaintiffs, being Mr Romaro and Pikachu Pty Ltd, in certain proceedings in this Court, brought against the plaintiffs' insurers, which are ongoing. For reasons explained below, the plaintiffs now wish to commence a claim against its former solicitors, Silverfield, as a result of its alleged failure to exercise reasonable care, skill and diligence in its conduct of those other proceedings.
The plaintiffs contend on this Application that it would be just for the Court to order that the defendant reinstate Silverfield's registration and to make consequential orders that nullify the accrual of time after Silverfield's deregistration for the purposes of the Limitation Act 2005 (WA) (Limitation Act).
B. Preliminary matters
Materials relied on for the purposes of the Application
I received a comprehensive outline of submissions from the plaintiffs dated 19 June 2024 (Submissions), which were supplemented by oral submissions from counsel at the hearing on 1 August 2024.
The plaintiffs relied on the following affidavits in support of the Application, which were formally read at the hearing:
(a)the affidavit of Terry Stephen Romaro sworn 9 April 2024 (Romaro Affidavit), which provides a fulsome explanation of the factual background to the Application;
(b) the affidavit of William Samuel Haslam sworn 24 April 2024;
(c) the first, second, third and fourth affidavits of Jonathan Rex Shepherd sworn 24 May 2024, 6 June 2024, 19 June 2024 and 17 July 2024 respectively; and
(d) the first, second and third affidavits of Fraser Lewis Doling Dudfield affirmed 24 May 2024, 6 June 2024 and 29 July 2024 respectively.
Service of the Application on ASIC
I am satisfied, having regard to the affidavit material and the submissions, that the Application was properly served on ASIC, and ASIC was given notice of the hearing.
ASIC's position is that, subject to no order for costs being sought against it, it does not oppose the orders sought and foreshadowed that it would not attend the hearing of the matter.[1]
Service of the Application on interested parties
[1] Submissions [14] - [15].
I am also satisfied, having regard to the affidavit material and the submissions, that the Application has been served on all interested parties, including the legal practitioner who was the former director of Silverfield. That practitioner was also given notice of the hearing date of the Application. The legal practitioner's position is that he did not oppose the orders sought and did not wish to be heard in relation to the Application for reinstatement.[2]
[2] Submissions [16] - [20].
C. Legislative framework and relevant principles
Legislation
Section 601AH of the Act provides as follows:
601AHReinstatement
Reinstatement by ASIC
(1) ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered.
…
Reinstatement by Court
(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:
(a) ASIC reinstates the registration of a company under subsection (1) or (1A); or
(b) the Court makes an order under subsection (2);
the Court may:
(c) validate anything done during the period:
(i) beginning when the company was deregistered; and
(ii) ending when the company's registration was reinstated; and
(d) make any other order it considers appropriate.
Note: For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).
ASIC to give notice of reinstatement
(4)ASIC must give notice of a reinstatement in the Gazette.
(4A)If an application was made to ASIC for the reinstatement of a company's registration, ASIC must give notice of the reinstatement to the applicant.
Effect of reinstatement
(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.
(6) Subsection 601AH(5) does not affect the cancellation of an Australian financial services licence held by the company if the cancellation occurs because the company was deregistered.
Note: This Part does not apply to a CCIV or a sub-fund of a CCIV: see Subdivision B of Division 9 of Part 8B.6.
Section 601AG of the Act is not directly relied upon by the plaintiffs in the present Application, but its terms are of some relevance to the matter, as will be seen:
601AGClaims against insurers of deregistered company
A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:
(a) the company had a liability to the person; and
(b) the insurance contract covered that liability immediately before deregistration.
Relevant principles - general
The following principles are drawn from the plaintiffs' submissions, which themselves draw upon the decision of Hill J in ACN 009 009 072 Pty Ltd (in liq) v Australian Securities and Investments Commission,[3] among other decisions.
[3] ACN 009 009 072 Pty Ltd (in liq) v Australian Securities and Investments Commission [2022] WASC 221 (ACN 009 009 072 v ASIC).
Sections 601AG and 601AH of the Act provide remedies in favour of the plaintiffs to avoid the unjust consequence of a company's deregistration. As beneficial and remedial provisions, they are to be construed to give the fullest relief that their language will allow. These provisions are to be read together.[4]
[4] Allianz Australia Insurance Ltd v Mercer [2014] TASFC 3 [164] (Mercer).
The court may make a reinstatement order under s 601AH(2) if the application is made by a 'person aggrieved by the deregistration' or a former liquidator, and the court is satisfied it is 'just' for the company's registration to be reinstated. Upon reinstatement, the company is taken to have continued in existence as if it had not been deregistered: see s 601AH(5) of the Act. The court has a residual discretion whether to make an order under s 601AH of the Act.[5]
[5] Re Deputy Commissioner of Taxation; in the matter of James Hardies Australian Finance Pty Ltd [2008] FCA 1181; (2008) 248 ALR 557 [13]; Jit Sun Investments Pte Ltd v Australian Securities and Investments Commission [2021] WASC 235.
The phrase, 'person aggrieved' is not expressly defined in the Act. In examining this phrase, Hill J accepted, as do I, the following statement of principle:[6]
[28]The term 'person aggrieved' is not expressly defined in the Act and should not be construed narrowly. In determining whether the plaintiff is a person aggrieved by the deregistration of the company, the court must consider whether the plaintiff has shown that deregistration has deprived them of something, or injured or damaged them in a legal sense, or that they became entitled in a legal sense to regard the deregistration as the cause of dissatisfaction. (footnotes omitted)
[6] ACN 009 009 072 v ASIC [28].
Further, Hill J referred to the discretion under s 601AH as 'broad', and identified the following factors as being relevant for the court to take into account in exercising the discretion:[7]
(a)the circumstances in which the company came to be deregistered;
(b)the future activities of the company, if an order for reinstatement is made;
(c)whether any particular person is likely to be prejudiced by the reinstatement; and
(d)the public interest generally.
[7] ACN 009 009 072 v ASIC [30].
Section 601AG provides a mechanism by which a plaintiff may sue the deregistered company's insurer.[8] The insurer may, however, rely on all defences that would otherwise have been available to the company, as the plaintiff was not intended to be placed in a better or worse position than had the company not been deregistered.[9]
[8] Pagnon v Workcover Queensland [2000] QCA 421; [2001] 2 Qd R 492 (Pagnon); Mervyn Jonathan Kitay as liquidator of ACN 009 009 072 Pty Ltd v Chaucer Syndicates Ltd (CRN 184915) as managing agents for Chaucer Syndicate 1084 [2021] WASC 450 [124] (Chaucer Syndicates); ACN 009 009 072 v ASIC [44].
[9] Chaucer Syndicates [124]; Hutchinson v Australian Securities and Investments Commission [2001] VSC 465; (2001) 167 FLR 90 [25] (Senior Master Mahony) (Hutchinson).
Section 601AG was not intended to be the only mechanism available to pursue a deregistered company and was not intended to prevent a plaintiff pursuing relief under s 601AH. The interaction between the two provisions requires consideration though, bearing in mind the relief the Court is empowered to grant is discretionary.
For example, in Del Borrello v Australian Securities and Investments Commission,[10] Beech J declined to grant the relief sought by the plaintiff under s 601AH(2) of the Act, in circumstances in which his Honour was informed that the company sought to be reinstated was likely to be insured, and the identity of the insurer was apparent (although these matters were not definitively known, it would seem). A remedy under s 601AG was thus likely to be available. The utility of reinstating the deregistered company, pursuant to s 601AH(2), was therefore questionable. In these circumstances, one might conclude that the prospective plaintiff was not a person aggrieved by the deregistration of the company.
[10] Del Borrello v Australian Securities and Investments Commission [2008] WASC 48 (Del Borrello).
His Honour observed that it may nonetheless be open to find that a person was sufficiently aggrieved to be permitted to seek relief under s 601AH even though a claim was available under s 601AG (permitting proceedings to be brought directly against the deregistered company's insurers).[11] Beech J expressed the view that 'special circumstances' would need to be found to satisfy the Court the plaintiff was nevertheless aggrieved in those circumstances.[12]
[11] Del Borrello [8].
[12] Del Borrello [15].
The plaintiffs submitted on this Application that the procedure in s 601AH is apt, rather than pursuing relief under s 601AG, when the combined remedy of reinstatement and consequential orders nullifying the accrual of a limitation period after the company's deregistration is required.[13]
Relevant principles - suspension of limitation periods
[13] Pagnon [14].
If the court makes an order under s 601AH(2), then s 601AH(3)(d) confers power on the court to make any such other order as it considers appropriate. This includes an order to nullify the effect of the limitation period during the period between when the company was deregistered and the expiration of the limitation period.[14] Hill J accepted the following factors as relevant to the exercise of the discretion in this regard:[15]
(a) whether during the entire period, the party had an intention of suing the deregistered company and whether time should only run for such period as there was such an intention until the company was reinstated to the register;
(b) the practical effect of deregistration on any decision to commence proceedings before the expiry of the limitation period; and
(c) whether the deregistered company is the plaintiff or a prospective defendant. (footnotes omitted)
[14] Pagnon [12] - [15]; ACN 009 009 072 Pty Ltd (in liq) v ASIC [31].
[15] ACN 009 009 072 Pty Ltd (in liq) v ASIC [31].
It is necessary to say something about the approach which should be adopted under s 601AH(3) to the suspension of a limitation period when ordering reinstatement, and as to the relevance of the first factor mentioned above at [16]. In this respect, the plaintiffs relied upon the decision of the Full Court of the Supreme Court of Tasmania in Mercer as to the operation of s 601AH, although the plaintiffs recognised that that decision was primarily concerned with the operation of s 601AG. The plaintiffs referred to the following passage from Porter J's decision in particular (with whom Tennent and Wood JJ agreed):[16]
[163]… If the only reason reinstatement is sought is the expiration of a time limit, an order will almost inevitably be made, with the associated direction that the interim period after deregistration not count for limitation purposes.
[16] Mercer [163].
The foregoing passage suggests, on its face and without limitation or qualification, that the time period after deregistration should not count against the prospective plaintiff. The degree of force which this passage carries, and the extent to which it ought be applied by this Court, was not a matter on which I received full argument on the present Application. However, having regard to the authorities on this issue, I am of the view that the passage in Mercer requires some qualification. Indeed, Archer J noted in Chaucer Syndicates that there are differences of opinion in some of the authorities as to the approach to be adopted in exercising the discretion to suspend time.[17] In reviewing this issue, Archer J referred to Porter J's decision in Mercer (which I have discussed above), the decision of Brereton J in Re Regional Planners Developments Co Pty Limited,[18] and the Victorian Court of Appeal decision in Chalker v Clark.[19]
[17] Chaucer Syndicates [179].
[18] ReRegional Planners Developments Co Pty Limited [2015] NSWSC 1996; (2015) 110 ACSR 457 (Regional Planners).
[19] Chalker v Clark [2008] VSCA 92.
In the last of these authorities, Chalker v Clark, the court declined to grant any relief under s 601AH of the Act. The result in that case was driven by the rather extreme factual setting, which involved an application to reinstate a company to permit the plaintiff to be assigned a cause of action. However, the causes of action, being alleged breaches of contract and duty, had occurred more than 10 years before the application was made, and the company had been deregistered more than 7 years before it was made. The speculative nature of the underlying claims weighed heavily in the Court's decision to dismiss the reinstatement application.[20]
[20] Chalker v Clark [39] (Osborn AJA), [40] (Dodds-Streeton JA), [41] (Maxwell P).
Further, the court in Chalker v Clark concluded that there was no proper basis for an order to avoid the effect of the effluxion of time. As Maxwell P concluded, the 'limitation period had the very powerful significance for [that] application that the reinstatement would be futile, since it was inconceivable that there would be an extension of time.'[21]
[21] Chalker v Clark [47] (Maxwell P).
In ReRegional Planners Developments Co Pty Limited, Brereton J concluded the court had jurisdiction under s 601AH(3)(d) to make the reinstatement order sought. That being so, and being satisfied he had power to make an order that had the effect of suspending the limitation period, his Honour turned his attention to the manner in which the discretion should be exercised.[22] In addressing this issue, his Honour attached significance to the intention of the party to initiate proceedings against the deregistered company, concluding that, in the absence of such an intention, the deregistration would not have practically precluded the institution of proceedings. His Honour held:
[29]As it seems to me, there is nothing in the evidence to indicate any intention or attempt to sue the company prior to about April 2014. It matters not for the purposes of whether a limitation period runs that the potential plaintiff is involved in other proceedings or distracted by other business or has difficulty in obtaining solicitors or is absent from the country. None of those matters are reasons for suspending the running of a limitation period. The question is whether the deregistration of the company practically precluded the plaintiff from instituting proceedings, and there is nothing to suggest that, but for the deregistration, proceedings would have been instituted before May 2014.
[30]By May 2014, however, that the position had changed. The plaintiff was by then investigating the possibility of bringing proceedings against the company. At least by 7 May 2014, the plaintiff was aware that the company was deregistered and had begun to make inquiries of the solicitors. At that stage, it had approximately three months remaining to it before the limitation period would expire in which it could have brought those proceedings, but for the fact that the company was deregistered.
[31]It can therefore be said, I think, that for a period of about three months before the limitation period expired in August 2014, the deregistration of the company practically prevented the plaintiff from bringing proceedings against it which otherwise the plaintiff could and would have brought. That disability has continued to the present day while the company remains deregistered.
[32]It therefore seems to me that a just application of the principles to which I have referred would be to provide that the limitation period did not run or was suspended for a period from 7 May 2014 to the present date. The practical effect of that will be that the plaintiff will have roughly three months from the present date (when I will make the reinstatement order) in which to commence proceedings if minded to do so.
[22] Regional Planners [11], [15] and [28] (Brereton J).
As is apparent from the foregoing, Brereton J did not axiomatically accept that the entire period post-deregistration should be the subject of suspension. The point of time at which the registration had practical significance was relevant to the analysis. This approach properly reflects, in my view, the nature of the task which confronts the court in considering whether the limitation period should be extended, as an order consequential upon the reinstatement of a company. That is, it is a discretionary task. The power must be exercised judicially, having regard to the circumstances of the particular matter, without rigid adherence to some fixed criteria. Fundamentally, the order made must be appropriate in the circumstances.
I respectfully see, therefore, the force of the observations made by Archer J in Chaucer Syndicates[23] in this regard, specifically her Honour's reminder that consequential orders under s 601AH(3) will not inevitably be made.
[23] Chaucer Syndicates [192].
Hill J in ACN 009 009 072 Pty Ltd (in liq) v ASIC similarly accepted it was relevant to consider whether, during the entire period, the party had an intention of suing the deregistered company and whether time should only run for such period as there was such an intention until the company was reinstated to the register.
D. Factual background
The following factual background is drawn from the affidavit material relied upon by the plaintiffs. The course of events, at least in terms of pivotal events and dates, is also reflected in the diagram which is Attachment A to these reasons. The affidavit materials provide a relatively fulsome account of the overall sequence of events, which is, as the plaintiffs have observed, long and detailed. It is unnecessary to set out all of this material, given the unopposed nature of this Application, and I will confine the factual background below to the most salient matters.
Background
The first plaintiff, Mr Romaro, is the sole director of the second plaintiff, which is the corporate trustee of the first plaintiff's self-managed superannuation fund.
Silverfield was an incorporated legal practice that traded under the name and style of Park Legal Solutions. In the period between 10 March 2015 to 15 January 2019, Silverfield represented the plaintiffs in proceedings in this Court, being CIV 1632 of 2014 (consolidated with CIV 2384 of 2014). That action is currently being case managed by Whitby J (Insurance Proceedings).
The Insurance Proceedings involve claims made by the plaintiffs against their insurance brokers and AMP Financial Planning Pty Ltd who the plaintiffs say is responsible for the insurance brokers' conduct.
The plaintiffs now wish to commence a proceeding against its former solicitors, Silverfield, as a result of its alleged failure to exercise reasonable care, skill and diligence in its conduct of the Insurance Proceedings.
Unfortunately from the plaintiffs' perspective, Silverfield was deregistered on 4 August 2021. Pursuant to s 601AD(1) of the Act, a company ceases to exist upon its deregistration. So, whilst Silverfield remains deregistered, the plaintiffs will necessarily be prevented from pursuing a cause of action for breach of professional duty against that entity.
According to the plaintiffs, on at least one view of the factual events, the time limit within which the plaintiffs could claim against Silverfield, as prescribed by s 13 of the Limitation Act 2005 (WA) (Limitation Act), expired on 12 July 2023.
Changes in insurance policies
Mr Romaro asserts that he acted on the advice of his insurance brokers and changed his insurance policies in 2007/2008. Among other matters, these changes meant his pre-existing insurance policy was cancelled, by which Mr Romaro had been covered and would receive financial benefits if he suffered a critical illness such as cancer. The cancelled policy was in effect replaced by two insurance policies pursuant to which Mr Romaro was to receive financial benefits if he suffered a critical illness such as cancer.
Subsequently, in May 2020, Mr Romaro was diagnosed with prostate cancer and made a claim on one of the new polices (being the AXA Policy). The claim was rejected by the insurer on disclosure grounds.
The Insurance Proceedings
The plaintiffs' claim in the Insurance Proceedings rests on the alleged breach of professional duties, breach of fiduciary duties and misleading and deceptive conduct on the part of the plaintiffs' insurance brokers, in relation to the advice given to the plaintiffs concerning the transactions which effected a change in the insurance policies.
The plaintiffs' lawyers
The plaintiffs have been represented by various law firms in relation to the Insurance Proceedings. Those firms have been:
(a)Park Linfoot Legal Solutions, from 2013 to 10 March 2015;
(b)Park Legal Solutions, from 10 March 2015 to 15 January 2019;
(c)Kott Gunning, from 15 January 2019 to 6 December 2021; and
(d)Blackwall Legal LLP, from 6 December 2021 to currently.
The same lawyer was the primary legal practitioner with the day to day conduct of the Insurance Proceedings over the period from 2013 to January/February 2021. When that practitioner ceased working at Kott Gunning, there was something of a hiatus in the conduct of the proceedings, which was resolved when Blackwall Legal LLP assumed the conduct of the matter for the plaintiffs in December 2021.
The plaintiffs state that, in July 2015, the defendants in the Insurance Proceedings provided discovery of documents. It is then contended that the legal practitioner acting for the plaintiffs had received all documents necessary to identify that the first plaintiffs' loss and damage as claimed in the Insurance Proceedings included the lost opportunity to retain insurance protection under or equivalent to the MLC Policy.
Procedural steps in the Insurance Proceedings
A series of procedural steps then unfolded in the Insurance Proceedings, which may conveniently be summarised as follows:
(a)On 17 July 2022, the plaintiffs filed an amended statement of claim to more fully plead their case.
(b)On 1 August 2022, the insurers asserted that the proposed amendments fell outside the causes of action described in the indorsements in the originally filed writs.
(c)On 27 September 2022, the insurers asserted that part of the amended claims were time-barred.
(d)In about August or September 2022, the first plaintiff became aware that Silverfield may be found to owe the plaintiffs a liability if the insurers were successful in their contention that part of the plaintiffs' claim connected with the MLC Policy was time-barred.
(e)On 19 October 2022, the plaintiffs filed an application to amend the indorsed writs of summons. That application proceeded to a hearing before Master Sanderson on 31 January 2023 and the Master published his reasons for decision on 28 June 2023, granting the plaintiffs' application for leave to amends their writs of summons. In essence, the Master concluded that the plaintiffs' amended pleadings were within the scope of the original indorsement, but for the avoidance of doubt, the plaintiffs would be permitted to amend the indorsements if they wished to do so.
(f)On 13 September 2023, the insurers appealed the decision of the Master.
(g)On 24 October 2023, the plaintiffs filed their Substituted Consolidated Statement of Claim.
(h)On 26 October 2023, the insurers' appeal was dismissed by the Court of Appeal.[24] The reasons for decision of the Court provide a useful overview of the allegations in the Insurance Proceedings and the interlocutory steps undertaken by the parties.
(i)On 29 January 2024, the insurers filed a defence raising a limitation of action defence. The defence included pleas to the effect that:
(i)any cause of action relating to the first plaintiff's inability to recover under the MLC Policy accrued (at the latest) on 12 July 2011;
(ii)the indorsements of writs filed by the plaintiffs in the actions were limited to advice provided in connection with the transaction transferring the ING Policies to AXA;
(ii)the plaintiffs did not, until amendments to their statement of claim in 2022, plead causes of action connected with the advice to replace the MLC Policy with the ING Policies or to claim that the plaintiffs were entitled to recover amounts that would have been payable under the MLC Policy when the first plaintiff was diagnosed with prostate cancer; and
(iv)the claim that the plaintiffs are entitled to recover amounts payable under the MLC Policy were outside the scope of the (unamended) indorsements of writs and the plaintiffs are thus precluded from recovering by operation of the Limitation Act.
Intention to sue Silverfield
[24] Low v Romaro [2023] WASCA 155 (Mitchell and Vaughan JJA).
Mr Romaro has deposed that, at least since August or September 2022, he had formed an intention to bring a claim against Silverfield as a prospective defendant to the Insurance Proceedings in response to the possibility that part of his claim has been time-barred due to the drafting of his claim by his former solicitors.[25] The essence of the prospective claim is that Silverfield's omission to apply to amend the indorsements of writ or amend the pleadings in the Insurance Proceedings, prior to 12 July 2017, constituted a breach of duty which will cause loss and damage if the limitation defence relied upon by the defendants in the Insurance Proceedings is made good.
[25] I will take the date of 1 September 2022 as the relevant date here for the purposes of these reasons, being the midpoint.
Further, Mr Romaro has deposed that, if Silverfield is reinstated and time under the Limitation Act is suspended for a period after the date Silverfield was deregistered, he intends to either join Silverfield as a defendant to the Insurance Proceedings, or commence new proceedings to be consolidated with, or heard alongside, the Insurance Proceedings.
Finally, Mr Romaro deposes that the plaintiffs first became aware that Silverfield had been deregistered on 6 February 2024.
E. Disposition
The issues for determination on this Application are: (1) whether the plaintiffs are persons aggrieved within the meaning of s 601AH(2)(a)(i) of the Act; (2) whether the Court is satisfied it is just to order the reinstatement of Silverfield; and (3) whether the Court should make any consequential order suspending the limitation period during the period Silverfield was deregistered. I turn to consider these issues now.
Person aggrieved
I accept the plaintiffs are persons aggrieved with standing to bring this Application seeking reinstatement of Silverfield under the Act, subject to considering the operation of s 601AG of the Act.[26] The plaintiffs have a potential cause of action or causes of action against Silverfield which cannot be ventilated whilst the company remains deregistered. Put another way, I accept that, had Silverfield not been deregistered, a claim would have been commenced by the plaintiffs against Silverfield after 1 September 2022.
[26] Submissions [71] - [73].
The presence, and operation, of s 601AG remains to be addressed.
The legislative policy underlying s 601AG is to 'shortcut the need to reinstate the company, and to do so by enabling the ultimate recipient of the insurance proceeds to sue the insurer direct where the company has been dissolved without imposing the additional trouble and expense of first applying to have it reinstated'.[27] As to the interaction between s 601AG and s 601AH of the Act, I repeat the observations I made at [16] and [17] above.
[27] Pagnon [17].
The plaintiffs have not applied for orders under s 601AG, either in this Application or previously, but accept the likelihood that Silverfield would be insured for any claim that the plaintiffs may make against it.[28] The obstacle which would confront the plaintiffs, however, in pursuing the cause of action created by s 601AG, is that the insurer of Silverfield would be entitled to rely upon any defences otherwise available to Silverfield.[29] This includes any limitation defence. Accordingly, the plaintiffs would inevitably confront the limitation defence in any such proceedings.
[28] Submissions [69].
[29] Hutchinson [25].
The foregoing explains why the procedure under s 601AH is apt in the present circumstances, and the plaintiffs may properly be characterised as aggrieved by the deregistration of Silverfield, in the circumstance that the applicable limitation period may have expired. To put this differently - if the limitation period argument advanced by the defendants in the Insurance Proceedings is accepted, it would likely follow that the same defence could successfully be relied upon by any insurer of Silverfield.
To the extent to which 'special circumstances' are required to support the exercise of the discretionary power under s601AH, where a claim under s 601AG may also be available, I am satisfied they exist here. In the present circumstances, the likelihood that a claim against Silverfield's insurers under s 601AG would lack utility, given the looming limitation period argument, explains why resort to the procedure in s 601AH is appropriate.
Should Silverfield be reinstated
The plaintiffs point to several factors which support the conclusion that it is just to reinstate Silverfield under s 601AH(2) of the Act.[30] The primary factors upon which I consider such a conclusion can be reached are as follows:
(a)First, whilst Silverfield is deregistered, the plaintiffs will be precluded from commencing a claim against it for breach of duty. That is the sole purpose[31] for the present application under s 601AH(2) of the Act. Absent an order for reinstatement, the plaintiffs will be exposed to the risk that the limitation period argument in the Insurance Proceedings succeeds, causing them loss and damage in respect of which they might otherwise seek to hold their former lawyer liable. An order for reinstatement addresses this risk. Of course, the reinstatement will lack utility unless the limitation period controlling the commencement of proceedings against Silverfield is suspended in some way. That is a matter to address as part of the third issue below.
(b)Second, and allied to the first point, I am satisfied on the affidavit material that the potential claim against the plaintiffs' former solicitor is at least arguable and not speculative.
(c)Third, Silverfield was deregistered by an administrative act, initiated by the legal practitioner who was a director of the company. The deregistration was not caused or induced in any way by the plaintiffs, nor was it undertaken through a public winding up process which may have earlier put the plaintiffs on notice of this fact.
(d)Fourth, I accept it can be inferred from the documents filed with ASIC by the legal practitioner that the company has no liabilities and will not be insolvent. The company appears to have no creditors.
(e)Fifth, I have evidence before me that there are no companies currently registered with the company name 'Silverfield Nominees', such that no other parties will be prejudiced by the reinstatement in this regard.
(f)Sixth, there is no opposition to the reinstatement of the company and there is no evidence that an order requiring ASIC to reinstate the company would cause prejudice to any party.
[30] Submissions [74] - [80].
[31] Submissions [80].
For these reasons, I am satisfied that an order for reinstatement is just in all the circumstances.
Suspension of the limitation period
As already noted, the grant of orders under s 601AH(2) to reinstate Silverfield will, without more, likely mean that the limitation period for the potential breach of duty claim would have expired on 12 July 2023. No claim could have been brought at that time, given the deregistration of Silverfield almost two years prior to that point, on 4 August 2021.
In my view, it would be unjust to allow the limitation period to stand in these circumstances, without ordering a period of suspension to permit a claim to be brought against the deregistered company. It is also noteworthy in this regard that the legal practitioner who was a former director of Silverfield has not sought to oppose the Application and adduced no evidence of any particular prejudice to the company arising from the application to suspend the limitation period.
As I indicated to counsel at the hearing of the matter, I was comfortably satisfied on the papers that consequential orders should be made pursuant to s 601AH(3)(d) of the Act in relation to the expiration of the limitation period. In particular, I was satisfied that an order should be made that a period of time not be counted towards the limitation period for the purposes of the Limitation Act, or any other limitation period prescribed by law, with respect to the causes of action the plaintiffs may have against Silverfield.
The issue which I have reflected upon is the appropriate length of the suspension in the circumstances. The plaintiffs submitted that it would be just to suspend the limitation period for not less than 27 months from the date of deregistration, which would permit the plaintiffs to commence proceedings by around October 2025.[32] An alternative submission was advanced that the limitation period should be suspended by 23 months and 9 days, being the time elapsed between deregistration and the limitation period expiry.[33]
[32] Submissions [89].
[33] Submissions [90].
In considering this issue, the discretionary nature of the power must be borne in mind by the Court. The circumstances of the particular case are highly relevant to the exercise of the power to suspend the limitation period. I refer to my observations at [16] to [23] above in this regard.
In my view, the present Application is one in which it is appropriate to have regard to the point of time at which the plaintiffs formed an intention to sue the company in question. On the affidavit material, that intention was not formed until 1 September 2022. The deregistered status of Silverfield had no practical impact on the plaintiffs ability to commence proceedings prior to this time - for the simple reason that bringing such a claim was not yet on their litigation radar.
In the circumstances of this case, I would therefore not accept that the period of some 13 months between 4 August 2021, when Silverfield was deregistered, and 1 September 2022, when the intention to sue manifested, should be considered for the purposes of exercising the power in s 601AH(3)(d) of the Act.
I turn next to consider the period between September 2022 and the date of the pronouncement of orders on this Application (which will be 8 August 2024). This is a period of some 23 months.
It was open to the plaintiffs, having formed the view to sue Silverfield, to further investigate the prospect of commencing those proceedings and, perhaps thereby, discover that the company had been deregistered prior to the potential expiry of the limitation period on 12 July 2023. This was a period of around 10 months. Further, an application for reinstatement could have been brought at an earlier point in time, whether before 12 July 2023 or after, had the deregistration been unearthed by the plaintiffs.
It would be harsh to hold this entire lapse of time against the plaintiffs, though.
I say this because it is evident that between around October 2022 and January 2024, the plaintiffs were actively engaged in interlocutory disputes in the Insurance Proceedings, addressing the amendment and limitation period arguments raised by the insurers. The plaintiffs achieved successful results in those interlocutory arguments before the Master and then before the Court of Appeal, from which they no doubt drew some comfort in terms of their position in the litigation.
It seems that not until the filing by the insurers of their defence in late January 2024 were the stakes for the plaintiffs raised significantly. I accept, in a practical sense, the receipt of the formal pleaded defence raising the limitation period arguments is likely to have highlighted the need to bring, or at least further assess, the potential claim against Silverfield, their former lawyers.
It was at this point in the litigation time line that maximum attention was given to the claims against the plaintiffs' former lawyers and their conduct (in the period prior to 12 July 2017) of the Insurance Proceedings. This led, shortly thereafter, to the discovery that the incorporated law practice which had represented the plaintiffs at that time had been deregistered some 2 ½ years prior thereto.
Thereafter, there was a short delay in filing the present Application, which I do not assess as being unreasonable. That Application was programmed to a hearing, listed for 1 August 2024. The delays in the listing and hearing of the matter should not run against the plaintiffs.
When assessing the lapse of time since September 2022, given the foregoing matters, I am of the view that a considerable portion of this period should be suspended, and should not run against the plaintiffs. I would not consider it just to allow the entire period, as the plaintiffs were on notice of the insurers' limitation period arguments, the potential impact on the Insurance Proceedings as a result, the possibility that the insurers would plead these defences in their defence notwithstanding the dismissal of the appeal to the Court of Appeal,[34] and the availability of steps to discover the deregistration at an earlier point in time. But the majority of the period should be suspended.
[34] As is apparent from the reasons of the Court of Appeal in Low v Romaro [32].
Assessing as best I can this overall time period of some 23 months, I consider that the applicable limitation periods should be suspended for a period of 20 months from the date the plaintiffs formed the intention to sue Silverfield. This would, in effect, permit the plaintiffs to commence proceedings against Silverfield by on or about 12 March 2025 (on the assumption the limitation period argument which has been advanced in the Insurance Proceedings is correct).
Counsel for the plaintiffs accepted that only a short period of time would be required to permit the plaintiffs to commence the proposed proceedings, following the reinstatement of Silverfield. All indications are that the plaintiffs are ready to commence the proceedings in the very near future.
I have reflected on the form of the order which should be made to achieve the foregoing. In the interests of certainty, I would favour an approach which expressly identifies the precise length of the limitation period that has been suspended. A convenient way to achieve this is to order that:
Pursuant to s 601AH(3)(d) of the Act, no limitation period under the Limitation Act 2005 (WA), or any other limitation period prescribed by law, with respect to any causes of action that the plaintiffs have against the Company, be taken to have run for a period of 20 months commencing on 1 September 2022.
F. Conclusion and orders
For the foregoing reasons, I will grant the application, and make the following orders, subject to hearing from counsel:
1.Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act), the defendant, the Australian Securities and Investments Commission, forthwith reinstate the registration of Silverfield Nominees Pty Ltd (ACN 604 123 239) (Company).
2. Notice of these orders be given to the defendant and to the director of the Company.
3. Pursuant to s 601AH(3)(d) of the Act, no limitation period under the Limitation Act 2005 (WA), or any other limitation period prescribed by law, with respect to any causes of action that the plaintiffs have against the Company, be taken to have run for a period of 20 months commencing on 1 September 2022.
4. The parties bear their own costs.
5.The plaintiffs have liberty to apply on 3 business days' notice to ASIC and to Silverfield.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TL
Associate to the Honourable Justice Lundberg
8 AUGUST 2024
ATTACHMENT A
Visual Chronology of Relevant Events
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