Zare v The Australian Securities and Investments Commission
[2024] WASC 82
•22 MARCH 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ZARE -v- THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2024] WASC 82
CORAM: HILL J
HEARD: 15 MARCH 2024
DELIVERED : 15 MARCH 2024
PUBLISHED : 22 MARCH 2024
FILE NO/S: COR 36 of 2024
BETWEEN: MEHRAN ZARE
Plaintiff
AND
THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Defendant
Catchwords:
Corporations law - Application to reinstate deregistered company - Whether plaintiff is a 'person aggrieved' - Whether 'just' to reinstate deregistered company - Where deregistration occurred due to honest and inadvertent error - Where failure to reinstate company would result in delay of trial - Waste of court and party resources to be avoided - Application granted - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 601AH
Result:
Order for reinstatement made
Category: B
Representation:
Counsel:
| Plaintiff | : | P A Martino |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | P A Martino Barrister & Solicitor |
| Defendant | : | No appearance |
Case(s) referred to in decision(s):
Callegher v Australian Securities and Investments Commission (ASIC) (2007) FCA 482; (2007) 239 ALR 749
Casali v Crisp [2001] 165 FLR 79
Hugall v Australian Securities and Investments Commission [2009] WASC 185
Pilarinos v Australian Securities and Investments Commission [2006] VSC 301
Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ASCR 124
Teffaha v Australian Securities and Investments Commission (ASIC) [2010] NSWSC 511
The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247
HILL J:
By an originating process filed on 11 March 2024, the plaintiff sought an order under s 601AH(2) of the Corporations Act2001 (Cth) (Act) directing that Australian Securities and Investments Commission (ASIC) reinstate the registration of Blue Whale Farm Plantation Pty Ltd (ACN 118 718 666) (Company).
The deregistration of the Company occurred on 28 January 2024 pursuant to s 601AB(1) or s 601AB(1A) of the Act, which entitles ASIC to deregister a company because of a default in either lodgement of a document or payment.
The plaintiff relied on two affidavits in support of his application: an affidavit of the plaintiff filed 11 March 2024, and an affidavit of his solicitor, Paula Annette Martino filed 13 March 2024. The application was accompanied by a certificate of urgency and a minute of proposed orders.
At the conclusion of the hearing, I made orders for the reinstatement of the Company and indicated that I would publish reasons for my decision at a later stage. These are those reasons.
Legal principles
In considering an application under s 601AH(2) of the Act, the court is required to consider first, whether the plaintiff is a 'person aggrieved by the deregistration' of the company, and second, whether it is 'just' that the registration of the company be reinstated.
The term 'person aggrieved' is not expressly defined in the Act and should not be construed narrowly.[1]
[1] The Bell Group Ltd v Australian Securities and Investments Commission [2018] FCA 884; (2018) ACSR 247 [47].
As was observed by Barrett J in Teffaha v Australian Securities and Investments Commission,[2] the normal position is that someone occupying the position of shareholder or director, or both these positions, is not relevantly 'aggrieved' by the non‑existence of the company. Something more is needed, at least where the company was insolvent.
[2] Teffaha v Australian Securities and Investments Commission (ASIC) [2010] NSWSC 511 [10]. See also Casali v Crisp [2001] 165 FLR 79.
In determining whether a plaintiff is a person aggrieved by the deregistration of a 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.[3]
[3] Hugall v Australian Securities and Investments Commission [2009] WASC 185 [13]; Callegher v Australian Securities and Investments Commission (ASIC) (2007) FCA 482; (2007) 239 ALR 749 [50].
There is no temporal limitation in the term 'person aggrieved' and there need only be a causal link between the grievance and the deregistration of the company.[4] A person can become aggrieved as a result of events which occur after the time of the deregistration.[5]
[4] Bell Group Ltd v Australian Securities and Investments Commission [49].
[5] Pilarinos v Australian Securities and Investments Commission [2006] VSC 301 [49].
In considering whether it is 'just' to order the reinstatement of the company, the court's discretion under s 601AH(2) of the Act is wide. The court is obliged to take into account all relevant circumstances which include the circumstances in which the company came to be deregistered; whether, if an order was made, good use could be made of it; whether any person is likely to be prejudiced by the reinstatement; and the public interest generally.[6]
[6] The Bell Group Ltd v Australian Securities and Investments Commission [72]; Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; (2014) 98 ASCR 124 [5].
Service on ASIC
I am satisfied the application was served on ASIC on 12 March 2024 giving notice of the date and time fixed for hearing. I am also satisfied that the plaintiff has paid to ASIC the estimated administrative fees for the reinstatement of the deregistered Company.[7]
[7] Affidavit of Paula Annette Martino filed 13 March 2024.
The application was sought to be heard on an urgent basis because the deregistered Company is a defendant in proceedings due to commence on 25 March 2024.[8] In these circumstances of this matter, I was prepared to make an order abridging the time for service of the proceedings on ASIC until 13 March 2024.
[8] Affidavit of Mehran Zare filed 11 March 2024 [17] - [20], 'MZ2'.
Disposition
The evidence before the court is that the plaintiff was the sole director and company secretary of the Company from 20 August 2019 until its deregistration on 28 January 2024.[9] The plaintiff owns half of the shares in Rangewide Pty Ltd (ACN 105 967 717),[10] which in turn owns one‑third of the shares in the Company.[11]
[9] Affidavit of Mehran Zare filed 11 March 2024, 'MZ5'.
[10] Affidavit of Mehran Zare filed 11 March 2024, 'MZ6'.
[11] Affidavit of Mehran Zare filed 11 March 2024, 'MZ5'.
The matter relied upon by the plaintiff as giving rise to the basis on which the court should conclude he is a person aggrieved arises from the assets owned by the Company. The Company is an owner of 351 of 1755 undivided shares of Lot 449 on Deposited Plan 231012 Certificate of Title Volume 2958 Folio 498 (Property). There is a blue gum plantation on the Property which will be harvested in the next year. When this occurs, the Company will be entitled to receive funds.[12]
[12] Affidavit of Mehran Zare filed 11 March 2024 [12] - [16].
If the Company is reinstated, I accept the shareholders may become entitled to a dividend from any funds received from the harvesting of the blue gum plantation on the Property. If the Company is not reinstated, the plaintiff will lose this entitlement. On this basis, I accept the plaintiff is a person aggrieved by the deregistration and has standing to bring the application.
On the evidence before the court, I accept that the deregistration of the Company occurred as a result of an honest and inadvertent error.
In considering whether to order the reinstatement, I accept that the Company is a defendant in a case that is due to commence on 25 March 2024.[13] I accept that if the Company is not reinstated, this may delay the trial, which will be a waste of the resources of both the court and the parties.
[13] Affidavit of Mehran Zare filed 11 March 2024 [17] - [20].
In these circumstances, I am satisfied there is a benefit in having the Company reinstated and that, in all of the circumstances, it is 'just' to order its reinstatement.
Conclusion
For these reasons, I considered it was appropriate to make orders in terms of Annexure 'A' at the conclusion of the hearing.
Annexure A
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to the Honourable Justice Hill
22 MARCH 2024
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