Satchi & Satchi Australia Pty Ltd v Zeaiter Corporate Holdings Pty Ltd (RLD)

[2008] NSWADTAP 65

Appeal Panel - Internal

CITATION:	Satchi & Satchi Australia Pty Ltd & anor v Zeaiter Corporate Holdings Pty Ltd (RLD) [2008] NSWADTAP 65
PARTIES:	APPELLANTS Satchi & Satchi Australia Pty Ltd Thambiappah Satchithanantham Hemalathasothy Ranjini Satchithanantham RESPONDENT Zeaiter Corporate Holdings Pty Ltd
FILE NUMBER:	089025
HEARING DATES:	22 July 2008
SUBMISSIONS CLOSED:	22 July 2008
DATE OF DECISION:	8 October 2008
BEFORE:	O'Connor K - DCJ (President); Higgins S - Judicial Member; Weule B - Non-Judicial Member
CATCHWORDS:	Retail Leases - Deregistration of Company Applicant - Dismissal of Proceedings by Tribunal - Appeal - Reinstatement of Registration - Effect - Appeal Dismissed - Costs Award against Applicant's Agent - Appeal Dismissed
DECISION UNDER APPEAL:	Satchi & Satchi Australia Pty Ltd v Zeaiter Corporate Holdings Pty Ltd (unreported, 18 December 2007)
FILE NUMBER UNDER APPEAL:	075031
DATE OF DECISION UNDER APPEAL:	12/18/2007
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Corporations Act 2001 (Cth) Retail Leases Act 1994
CASES CITED:	Diamond Hill International Pty Ltd v Xu [2001] FCA 531 Hunter Valley Community Investments Pty Ltd v Bell [2001] FCA 201 Kondos & Anor v Citadin Pty Limited [RLD] [2003] NSWADTAP 7 Satchi & Satchi Australia Pty Ltd & Ors v Zeaiter Corporate Holdings Pty Ltd [2008] NSWSC 411 Satchithanantham v Zeaiter Corporate Holdings Pty Ltd [2007] NSWADTAP 74 Sweeney v Vandeleur Pty Ltd v BNY Australia Ltd (1993) 11 ACSR 356 White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441; (2006) 200 FLR 125
REPRESENTATION:	APPELLANT In person RESPONDENT A Clachers, Thurlow Fisher Lawyers
ORDERS:	1. Appeal dismissed. 2. Respondent to file and serve any submissions (limited to not more than 1000 words) in relation to its application for an award of costs within 14 days. Appellants to file and serve any submissions in reply (limited to not more than 1000 words) within a further 14 days. Respondent’s application to be determined without hearing, as permitted by Administrative Decisions Tribunal Act 1997, s 76.

1 On 18 December 2007 the Retail Leases Division of the Tribunal, following application by the respondent lessor, struck out proceedings brought by the first appellant, the lessee, under the Retail Leases Act 1994 (RL Act). The proceedings had been commenced on 22 February 2007 and bear the matter no. 075031. The Tribunal granted the respondent’s application on the ground that the first appellant was a deregistered company, and therefore had no legal existence, with the result that it could not conduct or defend legal proceedings: see Corporations Act 2001 (Commonwealth), s 601AB. The company had been deregistered on or about 15 July 2007.

2 As they have not been separately published, and are relatively brief, we have appended the Tribunal’s reasons to these reasons.

3 The fact of deregistration was brought to light by the respondent at the beginning of a hearing fixed for three days (17, 18, 19 December 2007), after several directions hearings had occurred and other hearing dates had been vacated. The second appellant has appeared throughout as the agent of the company. The Tribunal found that the second appellant had failed to inform the Tribunal of the company’s deregistration, and made an order for costs against him, in addition to making an order against the company.

4 The formal orders of the Tribunal were as follows:

1. Proceedings struck out on the ground of deregistration of the applicant company under the Corporations Act 2001.

2. Applicant [Satchi & Satchi Pty Ltd] to pay the Respondent’s costs as agreed or assessed.

3. Applicant’s agent (T. Satchithanantham) to pay Respondent’s costs as from 25 July 2007 as agreed or assessed.

4. Applications by T. & H. Satchithanantham to be joined as co-applicants rejected.

5 The company is the family company of the second appellant, Mr T. Satchi and his wife, Mrs H. Satchi, the third appellant who, along with her husband, is referred to in the fourth order. (The parties have permitted the Tribunal to use the abbreviated form of their names.)

6 The date 25 July 2007 referred to in the costs order, Order 3, is the last date in the view of the Tribunal when it would have become known to Mr and Mrs Satchi that the company had been deregistered by notice dated 15 July 2007. In the Tribunal’s view, Zeaiter should have been informed of this development, and, given the impossibility of the company pursuing the proceedings, should not have been exposed to the costs incurred in the period between July and December.

7 This dispute relates to the occupancy of the Ground Floor of retail shop premises at Wentworthville in a property owned by the respondent. The Lease names the first appellant, the company, as the tenant. The lease was for three years, from 1 March 2004 to 28 February 2007. The company purported to exercise the option to renew on 30 November 2006. The company filed the application in the Tribunal on 22 February 2007 in order, initially, to obtain urgent relief against removal from the premises, after the respondent had refused to grant an option, due to various disputes, particularly in respect of alleged non-payment of outgoings and inability to agree on future rent. An order was made by the Tribunal on 26 February 2007 by consent allowing the company to remain in occupation pending determination of the proceedings, subject to conditions that included a payment of an amount in respect of the disputed liability to outgoings, and for rent to continue at the old rate. The Tribunal file notes that the parties were to mediate. If any attempt to mediate occurred, it was not successful.

8 The application in its original form sought orders that the option had been properly exercised, an order as to the basis for calculation of the new rent, and an order as to the amount payable in respect of outgoings under the renewed lease.

9 On 19 December 2007, following the Tribunal order, the respondent locked the appellants out of the premises. The appellants applied to the Supreme Court for relief against forfeiture. Orders were made allowing it to remain in possession, and the orders were subsequently extended: by Hamilton J on 6 January 2008. On 7 January 2008 the company obtained reregistration. On Friday 1 February 2008, Zeaiter was informed, and accepted, that the company had been reregistered.

10 Mr Vincent appeared on behalf of Zeaiter before Buddin J on Monday 4 February 2008 in connection with the Supreme Court proceedings. Mr Vincent explained the connection between the proceedings before the Tribunal and the proceedings now occurring in the Supreme Court. The following exchange occurred (transcript, p 3):

HIS HONOUR: And you say particularly in view of the new development [the reregistration] that there are, as it were, proceedings on foot intended to remedy what was otherwise a technical defect?

VINCENT: Yes. Also on Friday we were informed that the company has now been reregistered so, in other words, now these proceedings can, in essence, be sent to be determined by the ADT. The alternative is if these proceedings are to be agitated and if for some reason Mr Satchithanantham wants to run his de facto appeals my client will fight and essentially we’ll have the argument today whether or not they should continue here or whether or not the orders should continue.

11 The result was that the parties entered into consent orders referring the Supreme Court proceedings to the Tribunal (see RL Act, s 75).

12 To complete the background to this appeal, it is necessary also to refer to a Lease of the First Floor of the same property. This lease was also for three years, from 1 March 2004 to 28 February 2007, and the named lessee was Mrs Satchi, not the company. This lease was terminated in July 2005. Mrs Satchi is the applicant or moving party in various proceedings that have been brought in this Tribunal, and in the Supreme Court, in relation to that termination. She has also been represented throughout by her husband, Mr Satchi. The litigation surrounding that case is reviewed by Hoeben J in a judgment delivered 9 May 2008, Satchi & Satchi Australia Pty Ltd & Ors v Zeaiter Corporate Holdings Pty Ltd [2008] NSWSC 411, referring in turn to Satchithanantham v Zeaiter Corporate Holdings Pty Ltd [2007] NSWADTAP 74 (18 December 2007), the underlying matter no. being 079043.

13 The present appeal was filed on 20 March 2008. The right to appeal is given by the RL Act, s 77, read in conjunction with ss 112 and 113 of the Administrative Decisions Tribunal Act 1997 (the ADT Act). There was no objection by the respondent to the appeals being permitted to proceed out of time, in line with the terms of the consent orders made 4 February 2008.

14 The appellants seek orders from the Appeal Panel setting aside the four orders.

15 In our view, there should be no interference with the Tribunal’s orders.

16 The principal appeal relates to Order 1. (By way of preliminary, we note that the Tribunal used the term ‘struck out’. It is clear that the parties saw the order as having the effect of dismissing the proceedings. Ordinarily the term ‘strike out’ is used in legal proceedings to refer to action short of final dismissal of proceedings, as in ‘striking out’ parts of an affidavit, a summons, defences or pleadings. Sometimes it is used to indicate that the substantive application or initiating process will not be further dealt with, as in ‘striking out’ an application as an abuse of process. The term usually seeks to convey that the body ordering strike out has refused to give substantive consideration to the matter or item the subject of the order. We understand the Tribunal’s use of the term in its orders in this case to be seeking to convey that the application for relief never reached the point of substantive consideration.)

17 Mr Satchi referred to the fact that the company had continued in occupation in the intervening months since December 2007, and the lessor had continued to accept rent. He submitted that the company had merely been in temporary non-compliance with regulatory requirements; and was now reregistered.

18 The Reply to the Notice of Appeal lodged by Zeaiter on 22 April 2008 contains its essential submissions. There were copious submissions filed on 14 and 18 July 2008 by Mr Satchi, for the company.

19 Zeaiter’s submissions in its Reply, and through Mr Clachers at hearing, were that the appeal should be dismissed because the Tribunal’s orders at the time were the appropriate ones. There was also an application for costs of the appeal on an indemnity basis.

20 The Corporations Act, s 601AH(5) provides:

‘ 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 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.’

21 In White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441; (2006) 200 FLR 125 Campbell J dealt with the question of what effect this provision had on the validity of actions taken while a company (Corporate Capital) was deregistered and its relationship with another company (Capital Finance):

‘115 Approaching the matter purely as one of statutory construction, the effect of section 601AH(5) is that, now, the statute requires everyone to treat Capital Corporate as though it had never been deregistered. However, that does not mean that anything which purported to be done on behalf of Capital Corporate during the period of its deregistration is thereby regarded as valid. If a director had purported to act on behalf of a deregistered company during the period of deregistration, mere reinstatement would not validate his action, because section 601AH(5) provides only a limited measure of retrospectivity, so that the director regains his office only from the time of reinstatement. Similarly, section 601AH(5) provides only a limited measure of retrospectivity concerning title to the property of the company, so that the property revests in it only from the time of reinstatement. Thus, notwithstanding the reinstatement, any contractual power which Capital Corporate had prior to the deregistration is still regarded, even after the deregistration, as having been vested in ASIC during the period of deregistration. If the contractual power was vested in ASIC, Capital Finance could not have had authority to exercise that contractual power.’

22 The latter sentences refer to the earlier provisions of s 601AH, i.e.:

‘ 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 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.

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. If ASIC exercises its power under subsection (1) in response to an application by a person, ASIC must also give notice of the reinstatement to the applicant.’

23 Campbell J surveyed the legislative history s 601AH. His Honour then turned to recent Australian case law examining the effect of reregistration on court orders made during the period of deregistration:

‘124 In Diamond Hill International Pty Ltd v Xu (2001) 19 ACLC 1139; [2001] FCA 531 Stone J considered an application to set aside certain orders to pay particular sums of money to particular people. Those orders had been made after there had been a costs order, which had been taxed and resulted in certificates of taxation. The applicant claimed that the orders should be set aside because at the time of the taxation it was deregistered, and only after entry of the orders was its registration reinstated.

125 The company alleged that in consequence of being deregistered at the relevant time there was no one who could make objections in relation to the bills of costs, and that in consequence, the quantum which had been ordered was grossly excessive. The applicant sought to have the orders set aside, under the court rule which empowered the Court to set aside orders which had been made in the absence of a party.

126 Her Honour was referred to the decision in DFC of T v Action Workwear Pty Ltd, and noted at [7] that the legislative provisions applicable in Action Workwear were not identical to those which presently apply. Her Honour said, at [8]:

“While s 601AH(5) deems the company, once reregistered, to have had a continuous existence, it clearly cannot in any sensible way deem the company to have had the opportunity to make submissions in a proceeding that concluded before reregistration.”

127 Her Honour then went on to consider whether it was appropriate to set aside the orders, and concluded that it was not. Thus, it was necessarily part of her Honour’s decision that the retrospective effect of section 601AH(5) was not enough to stop the orders which had been made from being ones which were made in the absence of a party. While the decisions of Handley JA and the Court of Appeal in the Pollnow cases were not cited to her Honour, the different conclusions reached in the Pollnow cases and the Diamond Hill case concerning a similar fact situation reflects, in my view, a real difference between the mode of operation of section 574(4) Corporations Law and section 601AH(5) Corporations Act 2001 (Cth). That difference is a consequence of section 574(4) resulting in there being, upon reinstatement, a restoration of the company’s property to it which is retrospective to the moment the company lost that property upon deregistration, while the retrospectivity which section 601AH(5) gives is retrospective only to the date of reinstatement.’

24 The Tribunal also referred to case-law dealing with the predecessor provision to s 601AB, s 574(1) of the Corporations Law: see Cole JA in Sweeney v Vandeleur Pty Ltd v BNY Australia Ltd (1993) 11 ACSR 356, esp at 360-361; and Hunter Valley Community Investments Pty Ltd v Bell [2001] FCA 201.

25 In our view, these cases and the consideration of the issue by Campbell JA in White v Baycorp Advantage all indicate that, while deregistered, a company has no capacity to prosecute legal proceedings and an order striking out legal process in its name is open to be made. The Tribunal in this case did not go so far as to deny the possibility that it could deal with the problem by adjourning the proceedings. It referred to the treatment of the circumstances in which discretion might be exercised in this way by Cole JA in Sweeney. It did not consider this to be an appropriate case for discretion to be exercised, given the long time (five months) since notice of deregistration had been given, and the failure of Mr and Mrs Satchi to make this known either to the Tribunal or to Zeaiter.

26 In our view, the strike out order, and consequently dismissal of the application, was properly made.

27 On the other hand, it is clear from the observations made by Mr Vincent, on behalf of Zeaiter, in the Supreme Court proceedings, that the respondent accepts that the substantive issues between the parties would be considered and resolved in the Tribunal.

28 We accept, as Mr Satchi submits, that the business continued to operate at the premises after the order was made (following the Supreme Court intervention), and payments of rent and the like continued to occur under the lease.

29 We also accept that it would be unjust if a resurrected company was, forever, precluded from agitating claims made while it was previously alive, and which had continuing commercial importance to it, as is said to be the position here.

30 However, there is no risk of an injustice of that kind in this case. One of the effects of the Supreme Court order made 4 February 2008 is that there is a live application before the Tribunal in the form of the transferred Supreme Court proceedings: Orders made 4 February 2008 in case number 3004/2008. That application can be used as the basis for making the claims the subject of the struck out proceedings. In any event, there has now been a further development in the dispute since our hearing on 22 July 2008. On 2 August 2008, the respondent locked the appellants out again, and this time they have not sought relief against forfeiture, and have filed further proceedings in the Tribunal, matter no. 085133.

31 The appeal also puts in issue the costs orders, Orders 2 and 3. The discretion available to the Tribunal is a wide one. The RL Act, s 77A, empowers costs to be awarded in accordance with s 88 of the ADT Act, which permits the Tribunal to award costs in relation to proceedings before it, ‘but only if it is satisfied that there are special circumstances warranting an award of costs’. There is now a substantial case-law in the Tribunal surrounding the exercise of this discretion, especially in connection with retail lease disputes; and see also Tribunal Practice Note 12.

32 While Mr Satchi may not be qualified in law, he took on the responsibility of appearing as agent for the company in the proceedings. A representative of a person involved in legal proceedings has a duty, in our view, to inform the tribunal or court hearing the proceedings at the first opportunity of any change in the legal capacity of the person represented. Mr Satchi failed to do that. Had he acted early and promptly, it may have been that the Tribunal would have allowed a short adjournment while the affairs of the company were put back in order. That procedural response will, as we have noted from our review of the authorities, sometimes be made.

33 It is very important in a Tribunal where the normal rule is that each party bears their own costs that the parties conduct themselves efficiently and in a manner that is not wasteful of costs. The Tribunal, in our view, exercised its discretion in a way that was reasonable and fair. It is open to the Tribunal to make an order against an agent or representative appearing for a party: see Kondos & Anor v Citadin Pty Limited [RLD] [2003] NSWADTAP 7 (17 March 2003).

34 The notice of appeal makes numerous objections to the way in which the Tribunal conducted its hearing of the respondent’s dismissal application on 17 and 18 December 2007. We have reviewed the transcript, and the detailed reasons for decision. In our view, Mr Satchi was given ample opportunity to present submissions, and his case for an order short of dismissal was fairly dealt with.

35 In our view, the Tribunal was also correct to dismiss the application for Mr and Mrs Satchi to be joined. We have nothing to add to the Tribunal’s reasons, appended.

36 Both parties have made applications for the costs of the appeal, and as noted earlier in the case of the respondent on an indemnity basis.

37 There is, in our view, no tenable basis for any award of costs in favour of the appellants. They have lost their appeal on all points. Accordingly, the respondent will be invited to make short submissions in support of its application. Directions follow.

Orders

1. Appeal dismissed.

2. Respondent to file and serve any submissions (limited to not more than 1000 words) in relation to its application for an award of costs within 14 days. Appellants to file and serve any submissions in reply (limited to not more than 1000 words) within a further 14 days. Respondent’s application to be determined without hearing, as permitted by Administrative Decisions Tribunal Act 1997, s 76.

APPENDIX

RETAIL LEASES DIVISION

DEPUTY PRESIDENT ACTING JUDGE CHESTERMAN

TUESDAY 18 DECEMBER 2007

075031 – SATCHI & SATCHI AUSTRALIA PTY LTD v ZEAITER CORPORATE HOLDINGS PTY LIMITED

EX-TEMPORE DECISION

HIS HONOUR: As indicated earlier, I am in a position to rule on the matters argued this morning. I apologise for underestimating the time I needed to prepare these reasons. Perhaps I should indicate, at the outset, that in proceedings of this nature the Tribunal is formally constituted by me sitting alone. Mr Fagg is an advisory member.

In these proceedings between Satchi & Satchi Australia Pty Limited as Applicant and Zeaiter Corporate Holdings Pty Limited as Respondent, the substantive hearing was set down to commence yesterday. The proceedings concern a retail shop lease of a property in Wentworthville from the Respondent to the Applicant. But yesterday morning, Mr Clachers, the solicitor appearing for the Respondent, handed up a printout of a search of the register of ASIC, the Australian Securities and Investments Commission, disclosing that on 15 July 2007 the Applicant was deregistered under section 601AB of the Corporations Act 2001.

Mr Satchithanantham, whom I will call (with his permission, I hope) Mr Satchi from now on, appeared as the Applicant’s agent. He indicated that shortly after the deregistration of the Applicant he became aware of that fact. He indicated also that neither he nor Mrs Satchi, who is the sole director of the Applicant and the guarantor under the lease, had managed to procure reinstatement of the company under section 601AH, even though ASIC had notified Mrs Satchi that by paying certain fees and filling in a reinstatement form she might be able to achieve this simply by applying to ASIC.

Yesterday, Mr Satchi gave the Tribunal to understand that a process of this nature was under way. This was not, however, apparent from a bundle that he handed up today, including information sheets put out by ASIC and blank application forms. Also contained in this material was a copy of a letter from ASIC to Mrs Satchi, dated 25 July 2007, which showed on its face that by that date, at the latest, she had received notice of the deregistration. The bundle finally included a letter dated the day of the deregistration itself, 15 July 2007, from ASIC to Mrs Satchi as sole director. But there was no indication, from the bundle, of the date on which that letter was received by her or indeed by anybody else on behalf of the company.

Relying on the ASIC search and the information given yesterday and today to the Tribunal by Mr Satchi, Mr Clachers applied yesterday with submissions in support today for orders as follows. First, that these proceedings, instituted by the Applicant against the Respondent, be struck out on the ground of the deregistration of the Applicant. Secondly, in the alternative, that these proceedings be struck out but with liberty to ASIC, in which the Applicant’s property became vested on the deregistration under section 601AD(2) of the Corporations Act, to apply for the proceedings to be re-listed. Thirdly, that the Applicant pay the Respondent’s costs of these proceedings under section 88 of the Administrative Decisions Tribunal Act 1997, which applies to proceedings under the Retail Leases Act 1994 by virtue of section 77A of the Retail Leases Act. Fourthly, that as from the date of deregistration Mr Satchi, in his capacity as the Applicant’s agent in the proceedings before and since then, be also liable for the Respondent’s costs.

These applications were, as I have already indicated, set down for argument this morning. During the course of yesterday’s relatively short hearing Mr Satchi was also advised to obtain such legal assistance as he could.

This morning, in addition to the bundle of documents already mentioned, Mr Satchi handed up a document headed “Application to become party to the proceedings”, signed by himself and by Mrs Satchi. This had two components of relevance. First, it set out an indication by ASIC, on being asked yesterday, to the effect that ASIC might be in a position within six to eight weeks to process an application for reinstatement under section 601AH(1) of the Corporations Act, so long as a form was submitted, fees were paid and ASIC was satisfied that (as appears in fact to be the case) the Applicant company was still trading. Secondly, the statement filed this morning by Mr Satchi and Mrs Satchi contained applications by each of them to be joined as parties to the present proceedings.

The Tribunal received addresses from Mr Clachers, from Mr Patel, who appeared for Mrs Satchi, and from Mr Satchi on the applications that were made yesterday on behalf of the Respondent and on the application for joinder of parties made today. I will deal with each of these applications separately.

First, as to the application to strike out the proceedings, Mr Clachers relied principally on section 601AD(1) of the Corporations Law and on two authorities. Section 601AD(1) says simply that a company ceases to exist on deregistration.

The first of the two cases that he mentioned was Sweeney and Vandeleur Pty Ltd v BNY Australia Ltd (1993) 11 ACSR 356. In this case a company had been dissolved by the Australian Securities Commission, as it then was, under section 574(1) of the Corporations Law, which is the predecessor for relevant purposes of section 601AB. Subsequently, this company instituted proceedings against a bank in the Supreme Court of New South Wales. Neither the director responsible nor the solicitor acting for it knew of the dissolution. Under subsections 2 to 5 of section 574 a procedure for reinstatement existed. The bank, having found out about the dissolution, filed a motion to strike out the proceedings. There was also a motion by the director concerned, together with three others, for leave to be granted to them to join the proceedings as plaintiffs.

Justice Cole granted the strike-out application by the bank and rejected the application for joinder of parties. I will quote from his reasons at pages 360-361 the passage on which his Honour relied.

“The fact that there exists a statutory provision which may result at some future time in a resurrection from dissolution effective, because of the statutory provision, from the date of dissolution does not mean that, pending that future occurrence flowing from a possible future exercise of the statutory power to resurrect, the company continues to exist.

It follows, in my view, that the summons must be struck out. There was no power for Mr Moustarcos [who was the solicitor acting for the company] to issue the summons on behalf of the company. Nor was there any right for counsel to appear on its behalf because it does not exist. For similar reasons there was no power in the company to issue the notice of motion seeking orders for the joinder of other parties. The consequence, in my view, is that the summons must be struck out as an abuse of process of the court, being proceedings instituted on behalf of a non-existent entity.

Mr Pritchard [who appeared to address the court on behalf of the company] sought an adjournment of the notice of motion issued on behalf of the company and, at least implicitly, an adjournment of the bank’s application to strike out the summons. The adjournment was sought for two alternate purposes. The first purpose was to enable an approach to be made to the ASC, in whom any cause of action being property of the dissolved company is vested, to take over the existing proceedings as plaintiff. The second was to adjourn the matter until after the hearing of proceedings which apparently Mr Sweeney [the relevant director whom I have mentioned] either has or intends to commence in the Northern Territory, where the company was previously registered, for its re-instatement. I doubt if I have jurisdiction to grant such an adjournment in respect of proceedings commenced on behalf of a non-existent entity. If I have, the application for the adjournment, assuming I should hear Mr Pritchard in his making of the application, involves the exercise of a judicial discretion regarding whether the application should be granted. The reason advanced why the application should be granted was that the company, assuming that it is reinstated, will suffer a detriment if the present proceedings are struck out because after reinstatement it would be obliged to recommence proceedings which would permit the bank to raise statutory limitation defences in respect of any interest payments made more than 6 years prior to the new filing date of any future summons. The company would lose the advantage of time ceasing to run from 12 July 1993. In opposition, Mr Allsop argued that the bank had held its hand in issuing the notice of motion for approximately a month to permit any reinstatement action to be brought but, so far as the evidence extends, that action has not been brought. There is no reason, he argued, why the bank should be deprived of any statutory limitation defence.

If the matter descends to exercise of discretion, and I do not think that it does, I would exercise discretion contrary to the interests of the company. It has permitted itself to be dissolved. The assertion that the dissolution flowed from failure to lodge accounts for the periods since 30 June 1987 was not contested. The Corporations Law provides for the giving of notice prior to a company being dissolved with adequate time for the company to act so as to prevent dissolution. If directors wish to ensure continuation of the existence of a company, it is their obligation to act appropriately to achieve that circumstance. That apparently was not done.

Further, there is a real question whether the court either has power to, or if it has, should permit the substitution of a new plaintiff for an action brought on behalf of a non-existent entity, such action being an abuse of the process of the court.”

Secondly, Mr Clachers relied on the following statement of principle in Hunter Valley Community Investments Pty Ltd v Bell [2001] FCA 201, at paragraph 44. This case related to a company, called “the first applicant”, which had been deregistered under section 601AB of the Corporations Act 2001 and was seeking to replead a claim already lodged that it knew to be defective. The passage at paragraph 44 is as follows.

“In my view leave, whether conditional or otherwise, should not be given to the first applicant to replead its case. I explained the position of the deregistered company in Re Morton; Ex parte Mitchell Products Pty Ltd (1996) 21 ACSR 497, at 514-515. Once the company is deregistered, it ceases to be a legal person. The fact that an application can be made to reinstate the company and that the reinstatement, if granted, is effectively retrospective to the date of dissolution (see now Corporations Law, section 601AH(5)) does not mean that in the interim the company continues to exist: Sweeney and Vandeleur Pty Ltd v BNY Australia Ltd (1993) 11 ACSR 356 (S Ct NSW), per Cole J. If follows that no order granting Hunter Valley leave to replead can be made until after it has been reinstated pursuant to the Corporations Law, section 601AH. I express no view on whether any claims that might ultimately be made on behalf of the first applicant (assuming it succeeds in being reinstated) can properly form part of the representative proceedings.”

In response to these submissions put by Mr Clachers, the arguments put by Mr Patel and Mr Satchi included the following so far as the strike-out application is concerned. First, that the Sweeney and Vandeleur case dealt with a different provision to section 601AB and indeed that in that case the company was dissolved, not merely deregistered. Secondly, that since the procedure for deregistration, in this case, included a notice in the Government Gazette foreshadowing the deregistration, the Respondent should have been aware of the deregistration taking place. Thirdly, that it was only fair and just in all the circumstances that the Applicant be given an opportunity to seek reinstatement and then continue with the present proceedings. Fourthly, that as a practical matter the lease between the parties was still in operation, with rent being paid by the Applicant to the Respondent and the Applicant remaining in occupation of the premises. And fifthly, because of the vesting of the Applicant’s property in ASIC, the proper course for the Respondent was to contact ASIC directly to ascertain whether it wishes to pursue this claim on the Applicant’s behalf in the Tribunal.

In my judgment, having heard these arguments, the strike-out application must be granted on the grounds put forward by Mr Clachers, in the light of the very strong authority to this effect on which he relied. The upshot of the two authorities from which I have quoted is that the Applicant in its present position simply does not have legal standing to pursue its claim. Furthermore, as is made clear in both of these authorities, the Applicant does not have the capacity even to seek the adjournment necessary to defer a determination of this application, pending the possible reinstatement of it under the Corporations Act.

I would also say that, having regard to the period of five months since the deregistration and to the fact that for most of that period of five months both Mr and Mrs Satchi were aware of the deregistration, the position that arose yesterday is akin to that of an applicant who has failed to appear at a scheduled hearing without any justification for the non-appearance. Conduct of that nature would, in the ordinary course, warrant striking out the application, having regard to the existence of an appointment at the Tribunal in circumstances where both those constituting the bench and the representatives of the parties have made preparations and taken the necessary steps in order to participate in the hearing.

I would point out that Justice Cole said, in the passage that I quoted from the Vandeleur case, that if a director of a company wishes to ensure its continuance it is the obligation of the director to act appropriately. That was patently not done in the present case.

I make four further points in connection with this decision upholding the application to strike out the proceedings.

First, the dicta in the Hunter Valley case make it clear that these consequences flow from deregistration under section 601AB even if that occurs after proceedings have been instituted by the company concerned. I should also mention in this connection that I can see no realistic distinction between the provisions under the Corporations Act (as it now exists) that were considered in the Hunter Valley case and the provisions of section 574 of the Corporations Law that were applicable in the Sweeney and Vandeleur case.

Secondly, I reject the suggestion that in some way or another it was incumbent on the Respondent to have ascertained that the deregistration had occurred by consulting the Government Gazette in which it was announced. This is clearly an impractical obligation to impose upon any lessor, or indeed on any party to proceedings such as these.

Thirdly, I recognise that this result may not seem fair and just to the Applicant company, insofar as it denies that company the opportunity to seek reinstatement and then proceed with this case. But it is relevant in this context, as I indicated during the hearing and Mr Clachers acknowledged, that this strike-out decision does not create a res judicata between the parties so as completely to bar future action on the same claim. There has been no determination of the merits of the Applicant’s claim. After it is reinstated, if it so wishes, it is not precluded from commencing proceedings, though as I remarked during the hearing it would be well advised to consider very carefully the consequences of deciding to do so.

Fourthly and finally in relation to the strike-out application, a consequence of the granting of that application is that the interim order made by the Tribunal by consent on 26 February 2007 is also dissolved. It is a consequence of the striking out of the proceedings as a whole.

The second application made by Mr Clachers on behalf of the Respondent was an application for an order of striking out subject to liberty being granted to ASIC to re-list. As I understand his submissions it is not necessary for me to determine that application, since it was put in the alternative to the first.

The third application by the Respondent was an application for costs against the Applicant. The relevant provision, as I have already mentioned, is section 88 of the Administrative Decisions Tribunal Act 1997. This authorises the Tribunal to award costs but only if “special circumstances warranting an award of costs” exist. It is recognised, in a series of cases, that where an applicant causes a respondent to incur legal costs by bringing proceedings but then – particularly if those proceedings are brought to the stage of commencement of the hearing – the applicant either withdraws the claim or it is struck out through a decision bypassing the merits of the case on grounds that are attributable to the applicant, then these are “special circumstances”.

What the Tribunal has held in these cases is that an applicant must not be permitted, without any costs penalty, to cause the opposing party in proceedings to incur considerable costs and indeed to expend a considerable amount of time preparing for a hearing, but then, through its own motion or through its own fault, to produce a situation where there is no hearing on the merits whatsoever and, indeed, the matter is struck out or dismissed against the applicant.

Applying those authorities, I consider that this application by the Respondent for its costs of these proceedings should be granted. The Applicant company must pay the Respondent’s costs of these proceedings, as agreed or assessed under the Legal Profession Act 2004.

The fourth application brought by the Respondent was for an order for costs against Mr Satchi personally, as from the date on which the Applicant company was deregistered (15 July 2007). Comparable circumstances were dealt with in two decisions of the Tribunal in proceedings under the Retail Leases Act 1994. These decisions are Ultraglen v Citadin Pty Ltd [2002] NSWADT 220 and Kondos v Citadin Pty Ltd [2003] NSWADTAP 7. The latter of these decisions was given on appeal from the former. These two authorities contain two rulings of importance.

First, under section 88(2) of the ADT Act, which authorises the Tribunal to determine “by whom” costs are to be paid, when an order is made under the section, costs may be awarded against a person who is not a party but who acts in the capacity of an agent representing a party. Secondly, it is appropriate to make an order of this nature where an agent, knowing that he or she has no proper authority to maintain proceedings on behalf of the relevant party, persists in doing so, thereby causing the opposing party to incur costs.

I have already set out the circumstances whereby Mr Satchi, as the Applicant’s agent, together with Mrs Satchi, its sole director, were made aware of the deregistration of the company during July 2007. The record of the proceedings since then shows a number of steps taken by Mr Satchi on behalf of the company which have required, in different ways, responses from the Respondent, thereby potentially incurring legal costs to be paid to its legal advisors. In my opinion, the principles that I have cited from these two Tribunal decisions are applicable in the present circumstances.

Mr Satchi, on his own admission, knew of the deregistration of the Applicant company by, at the latest, 25 July 2007. As from that date, he should be liable, in addition to the company, for the Respondent’s costs, as agreed or assessed under the Legal Profession Act 2004.

At the hearing, Mr Satchi indicated that significant hardship would be imposed upon him if an order of this nature were made without any provision for deferral pending further continuation of the proceedings in some form or other. I acknowledge the likelihood of this hardship, which is indeed regrettable. But under the law, as I understand it, this cannot of itself constitute a ground of deferring any such order.

It was made clear in the submissions by Mr Clachers that his client strenuously pressed for an order in the usual form. It must be made in that form. The matter of the timing of its enforcement is another matter, but the liability of Mr Satchi, together with that of the company, arises as from the date of these proceedings: that is, today’s date.

I will deal finally with the application that I have already mentioned, by Mrs Satchi (in her capacity as director of the company and guarantor under the lease) and by Mr Satchi (as a person directly involved in the activities of the Applicant company throughout) to be joined as parties.

In arguing this application on Mrs Satchi’s behalf, Mr Patel referred to her role as guarantor under clause 13 of the lease. In particular, he pointed out that that clause made her subject to all the liabilities that the Applicant as lessee might encounter by virtue of its status under the lease. Mr Patel also referred to Mrs Satchi’s capacity as the sole director of the company, describing her at one point as the sole person behind the corporate veil. He claimed that in her capacity as guarantor Mrs Satchi was indeed subrogated to the rights of the company under the lease. He also drew distinctions between the role of ASIC during the deregistration period and the role of the liquidator of a company who, by contrast, has a positive role in terms of managing the liquidated company’s assets.

Mr Satchi referred me to a range of arguments already raised in these proceedings and in other proceedings between Mrs Satchi and the Respondent, which have been heard but not yet determined. These were to the effect that both his and Mrs Satchi’s interests under the lease in this case were so direct and so immediate that they should effectively be regarded as parties along with the Applicant company, and should be entitled to enforce rights such as the Applicant company would be entitled to enforce.

None of these arguments are, in my opinion, sufficient to establish that either of these individuals has a claim to be joined as a party to these proceedings. I would point out in particular that the notion that Mrs Satchi, is in some sense subrogated to the company’s rights does not apply. The reason is that in the clear terms of clause 13 the position of a guarantor is that of somebody who may be held liable for the lessee’s liabilities as they arise under the lease but is in no sense put in a position to enforce rights accruing to the lessee under the lease.

The arguments which seek to bring together these proceedings and the other proceedings between Mrs Satchi and the Respondent to which I have already referred simply fail to take account of the fact that there were separate leases at stake in these two proceedings, involving different parties. Indeed, it was ordered, at the commencement of the hearing of the other proceedings, that the two sets of proceedings should be maintained as distinct proceedings.

I should add finally in this connection that this form of substitution of parties, or addition of parties, where a current party is a company that has been deregistered or dissolved was, in fact, rejected specifically as an expedient by Justice Cole in Sweeney and Vandeleur Pty Ltd v BNY Australia Ltd, in the passage that I have already read out.

That completes my reasons and the orders of the Tribunal will be as I have indicated.