Turner v Inspire Camps and Recreation Australia Pty Ltd
[2011] FMCA 400
•14 June 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TURNER v INSPIRE CAMPS AND RECREATION AUSTRALIA PTY LTD | [2011] FMCA 400 |
| HUMAN RIGHTS – Respondent failing to participate in proceedings – application heard undefended – respondent deregistered before judgment delivered – consideration of whether matter can proceed after deregistration of respondent – application dismissed. |
| Disability Discrimination Act 1992 Federal Magistrates Court Rules 2001, rr.13.03(a), 13.03(b) Corporations Act 2002, ss.601AB, 601AB(1), 601AD, 601AH(2)(B) |
| Annotated Corporations Act 2002, CCH 2002 7th Edition Ford’s Principles of Corporations Law, 10th Edition, Butterworths 2001 Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 United Service Insurance Co Ltd v Lang (1935) 35 SR (NSW) 487 |
| Applicant: | JOSHUA TURNER (BY HIS NEXT FRIEND, ANJA TURNER) |
| Respondent: | INSPIRE CAMPS AND RECREATION AUSTRALIA PTY LTD |
| File Number: | MLG 517 of 2010 |
| Judgment of: | Burchardt FM |
| Hearing dates: | 27 April 2011 & 19 May 2011 |
| Date of Last Submission: | 27 May 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 14 June 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hancock |
| Solicitors for the Applicant: | Disability Discrimination Legal Service Inc. |
| The Respondent: | No appearance |
ORDERS
The application be dismissed.
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 517 of 2010
| JOSHUA TURNER (BY HIS NEXT FRIEND, ANJA TURNER) |
Applicant
And
| INSPIRE CAMPS AND RECREATION AUSTRALIA PTY LTD |
Respondent
REASONS FOR JUDGMENT
On 12 April 2010 the applicant filed an application through his next friend alleging discrimination in contravention of the Disability Discrimination Act 1992. On 7 May 2010 I made orders by consent. The interlocutory orders were designed to ensure that the parties filed pleadings, undertook mediation and otherwise prepared for trial, which I fixed for a three day hearing in 2011 on a date to be fixed.
The applicant complied with the orders and filed particulars of claims on 5 July 2010. A formal notice of appearance was filed by David Chapman of Hayton Kosky on behalf of the respondent on 10 August 2010.
Since that time the respondent has not taken any steps in the proceeding, which means that it has not complied with any of the orders earlier consented to.
On 28 January 2011 I made further orders fixing the matter for trial in August 2011 because the applicant had not filed any witness statements. The applicant’s next friend in due course filed a witness statement and on 8 March 2011, I ordered that the matter be adjourned for hearing on 27 April 2011 at 9.30 am and that the applicant be granted leave to proceed on an undefended basis on that date.
The applicant filed subsequent material and the matter was heard on an undefended basis on 27 April 2011.
When considering the materials in chambers I developed a number of concerns about the applicant’s case. Because the respondent is clearly in default within the meaning of Rule 13.03(a) and (b) of this Court’s Rules, it is open to the Court not to require proof by way of evidence of the applicant’s claim, but rather to grant any relief that the Court has jurisdiction to grant that is sought on the face of the statement of claim (Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3] per Heerey J).
It seemed to me on reviewing the file that, amongst other things, the applicant had failed to plead or otherwise prove the incorporation of the respondent. I had various other concerns also. Accordingly, I listed the matter for further hearing on 19 May 2011. At that time, relevantly for these purposes, counsel for the applicant tendered as exhibit A1 a company extract for the company Inspire Camps and Recreation Australia Pty Ltd, which is clearly the respondent in this proceeding (see identity of its director, Benjamin Peter Loreng, who is clearly the Ben Lorenz referred to in the affidavit of the next friend filed 5 April 2011).
That extract shows that between 28 February 2011 and 7 May 2011 the company was the subject of a strike-off action in progress. Doubtless pursuant to that strike-off action, on 8 May 2011 the company was deregistered and the reason given is s.601AB of the Corporations Act 2002 (“Corporations Act).
Section 601AB gives two avenues pursuant to which ASIC may deregister. The first (s.601AB(1)) is where the company’s annual return is at least six months late, the company has not lodged any other documents under the Act in the last 18 months and ASIC has no reason to believe that the company is carrying on business.
The second (s.601AB(2)) is where the company is being wound up and ASIC has reason to believe that the liquidator is no longer acting, or the company’s affairs have been fully wound up and a return that the liquidator should have lodged is at least six months overdue, or the company’s affairs have been fully wound up under Part 5.4 and the company has no property, or not enough property, to cover the costs of obtaining a Court order for the company’s deregistration.
It is not clear which of those two applies, but given that winding up would presumably be mentioned in the company historical extract, it is reasonable to suppose that the company was deregistered pursuant to s.601AB(1) of the Corporations Act.
The effect of deregistration is set out in s.601AD of the Corporations Act. Pursuant to subsection (1) the company ceases to exist. Pursuant to subsection (2) its property vests in ASIC. In Ken Robson’s Annotated Corporations Act 2002, CCH 2002 7th Edition, the following commentary is set out in relation to s.601AB:
“If a company is deregistered while a party to court proceedings of any kind, it should be removed forthwith as of the deregistration. Further, neither solicitor nor counsel may appear for the company after deregistration and, if they do, they will be personally liable in costs on an indemnity basis (authorities omitted). However, if registration is achieved in time, the proceedings can continue unaffected, even if they were temporarily a nullity: Gekos Holdings Pty Ltd v Australian Horticultural Finance Pty Ltd (1994) 121 FLR 362. If the company is deregistered after the writ is filed, the court should strike out the statement of claim rather than dismiss the action. But if it is dismissed, the re-registered company may reverse the dismissal on appeal: Video Excellence Proprietary Limited v Cincotta (1998) 28 ACSR 389.”
It should be noted that the Court of Appeal in New South Wales, in the Video Excellence case, referred to the longstanding authority of
United Service Insurance Co Ltd v Lang(1935) 35 SR (NSW) 487, in which the Supreme Court of New South Wales made it clear that once deregistration takes place, on any view, no further action can be taken in any extant proceeding.
In Ford’s Principles of Corporations Law, 10th Edition, Butterworths 2001, at paragraph 27.700 under the heading “The Consequences of Deregistration Generally”, the following is set out:
“When a company ceases to exist upon deregistration it is treated as dissolved not only by courts in the place of incorporation but also courts elsewhere: United Service Insurance Co Ltd v Lang (1935) 35 SR (NSW) 487. A liquidator loses power in relation to the company and the liquidator’s statutory duty to the creditors and the contributors is ended. The liquidator remains liable to creditors for any previous breach of that duty (authorities omitted) unless the liquidator has obtained a release under s.481.
Because the company ceases to exist its debts and liabilities cease to exist so far as enforcement against the company is concerned.”
While none of the authorities to which I have referred deal in terms with the situation that has obtained here, where the deregistration has occurred without any notice to the applicant a matter of days before judgment might otherwise be thought to have been likely to be produced, the fact is that the clear indication gained from the authorities is that this action cannot proceed and should be dismissed.
The company formerly in existence, which constituted the respondent, simply does not exist anymore. Indeed, the fact of its deregistration is entirely consistent with its failure properly to participate in the proceeding.
By written submissions forwarded to the Court on 27 May 2011 (pursuant to a direction made on 19 May 2011), the applicant seeks that the Court defer delivery of judgment to enable an application for reinstatement to be filed in the Federal Court of Australia. The applicant’s solicitors have received instructions to make application to the Federal Court to reinstate the respondent company which has, as I have already described, been deregistered.
The applicant’s written submissions assert, correctly in my view, that the Court may make an order that ASIC reinstate the company if it is satisfied that it is just that the company’s registration be reinstated pursuant to s.601AH(2)(B).
The ASIC Regulatory Guide (incorrectly referred to as rule 83.29 in the applicant’s written submissions) makes it clear that the applicant may face various hurdles in seeking to reinstate the company (such as the possible requirement to pay fees and ASIC’s costs, if any, and the like). The ASIC Regulatory Guide at paragraph 83.29 refers to relevant considerations including whether the company is insolvent and whether the directors have a track record of management of failed companies.
There is absolutely no indication here as to whether or not the Court would be likely to be satisfied as to such matters. Assuming that the deregistration was pursuant to s.601AB(1), as I have earlier indicated is more probable than otherwise, it would seem to me very questionable whether the Court would regard the reinstatement of the company, which plainly has not been trading for an extensive period of time, as appropriate.
In the end the question is whether I should exercise my discretion to adjourn these proceedings effectively sine die until after the application posited by the applicant to reinstate the respondent is concluded.
In my view, the application to reinstate is completely misconceived.
It will (unless exemptions are granted) involve the expenditure of yet further funds by the applicant’s family in circumstances where the monetary claims in this case are very small. The applicant has after all only sought general damages in a very limited amount.
There seems to me to be no point in permitting matters to proceed in circumstances where all the weight of the authorities is to the effect that proceedings involving deregistered companies should cease finally forthwith upon deregistration. The various cases involving reinstatement usually show matters of considerable moment. While the applicant’s case is of course important, and particularly so to the applicant and his family, it does not have the significant commercial character that tends to obtain in the judgments relating to reinstatement.
Putting the matter simply, the applicant’s case has been overtaken by events. The respondent no longer exists because it either does not trade and/or is not solvent. In my opinion it would be a cruelty to the applicant and his family to permit the continuation of litigation in these circumstances. It therefore follows that the application will be dismissed. Self-evidently I will make no order as to costs.
While I retain a clear sympathy for the applicant and his mother, who have obviously been distressed by what they perceive to have occurred with the respondent, this judgment should not be taken as indicating that I have formed a concluded view favourable to the applicant in the proceedings. There were a number of complicated matters that I would otherwise have been required to deal with before arriving at such a conclusion. I should make it clear that I have not arrived at any conclusions. There is no point in doing so in view of the decision to dismiss the application.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate:
Date: 14 June 2011
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