Zero Alpha v Accurate Instrument Servicing Pty Ltd

Case [2011] QCATA 284

FEDERAL COURT OF AUSTRALIA

Binetter v Commissioner of Taxation [2011] FCA 1195

Citation: Binetter v Commissioner of Taxation [2011] FCA 1195
Parties: GARY ROBERT BINETTER v COMMISSIONER OF TAXATION and MAX DONNELLY
File number: NSD 301 of 2011
Judge: STONE J
Date of judgment: 21 October 2011
Catchwords: CORPORATIONS – winding up – application for approval for director of companies in liquidation to bring proceedings in name of companies – whether companies were necessary parties to any winding up order made in relation to them – whether winding up order can take effect at the same time as order for reinstatement of deregistered company – principles relevant to exercise of discretion to grant approval under s 471A(1A)(d).
Legislation:

Acts Interpretation Act 1901 (Cth) s 13(3)

Company Law Review Act 1998 (Cth) s 373

Corporations Act 2001 (Cth) ss 471A(1), 471A(1A)(d), 574, 601AH
Federal Court of Australia Act 1976 (Cth) ss 23, 25(6)
Cases cited:

Binetter v Deputy Commissioner of Taxation (No 2) [2011] FCA 207
Binetter v Deputy Commissioner of Taxation [2011] FCA 184
Brownlie v TTPM Pty Ltd (2003) 21 ACLC 1,204
CTG Pty Ltd v Yamamori (Hong Kong) Pty Ltd (1992) 10 ACSR 534
Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2010] FCA 1411
Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2011] FCA 219
Donmastry Pty Ltd v Albarran (2004) 49 ACSR 745
In rePinto Silver Mining Company (1878) 8 Ch D 273 at 283
HVAC Constructions (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd (2002) 44 ACSR 169
JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu [2008] 167 FCR 212
Lane Cove Council  v Geebung Polo Club Pty Ltd  (No 2) (2002) 41 ACSR 15
Maritime Services Board of New South Wales v Australian Chamber of Shipping [1977] 1 NSWLR 648
Melluish v Underwood Development Pty Ltd [2004] NSWSC 429
Ramantanis v G & M Excavations (2004) 22 ACLC 22
Rodgers v CJS Panels Pty Ltd [2001] VSC 470
Sharp v Deputy Commissioner of Taxation (Cth) (1988) 88 ATC 4,184
Date of hearing: 16 and 17 March 2011
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 39
Counsel for the Plaintiff: R Seiden with S Kaur-Bains
Solicitor for the Plaintiff: Argyle Lawyers
Counsel for the First Defendant: M L Brabazon SC with A J O'Brien
Solicitor for the First Defendant: Legal Department, Australian Taxation Office

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 301 of 2011
BETWEEN:

GARY ROBERT BINETTER
Plaintiff
AND:

COMMISSIONER OF TAXATION
First Defendant

MAX DONNELLY
Second Defendant

JUDGE:

STONE J

DATE OF ORDER:

21 OCTOBER 2011

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The plaintiff pay the costs of the first defendant.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD…

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AGLC
Zero Alpha v Accurate Instrument Servicing Pty Ltd [2011] QCATA 284
Case
[2011] QCATA 284
Decision Date

CaseChat Overview and Summary

Zero Alpha Pty Ltd and Accurate Instrument Servicing Pty Ltd were the subject of a winding-up application by the Commissioner of Taxation, which was ultimately granted by Jagot J. Mr Gary Binetter, a director of both companies, sought to set aside the orders for winding up and the appointment of the liquidator. He argued that he had standing as a director of the companies, which was reinstated upon their reinstatement on 11 March 2011. Binetter's application was made under section 471A of the Corporations Act 2001 (Cth) and section 23 of the Federal Court of Australia Act 1976 (Cth), which together require a director to have the leave of the Court (or the liquidator) to exercise a function or power as an officer of the company.

The primary legal issue before the court was whether Mr Binetter had standing to appeal the winding-up orders and the appointment of the liquidator. The court had to consider the principles relevant to the exercise of discretion to grant approval under section 471A(1A)(d) of the Corporations Act, as well as whether the companies were necessary parties to any winding up order made in relation to them and whether a winding up order could take effect at the same time as an order for the reinstatement of a deregistered company.

The court held that Mr Binetter did not have standing to appeal the winding-up orders and the appointment of the liquidator. Perram J had previously dismissed Binetter's application for leave to appeal on the basis that he did not have standing. The court held that a director may pursue an appeal against a winding up order in the name of a company if they first obtain leave under section 471A(1A)(d). However, Binetter was not seeking leave under that subsection. Instead, he brought the application for leave to appeal as a third party affected by the orders. The court held that Binetter's status as a director was irrelevant to his standing to appeal, as he was not a party to the proceeding before Jagot J. The court further held that Binetter's potential involvement in a liquidator's investigation and its downstream consequences did not suffice for standing purposes. The court held that the potential for a winding up order to be exposed to a broad range of putative appellants would pose a risk to the orderly conduct of the winding up.

The court dismissed Binetter's application for leave to appeal the winding-up orders and the appointment of the liquidator. The court held that Binetter did not have standing to appeal the orders and that the principles relevant to the exercise of discretion to grant approval under section 471A(1A)(d) of the Corporations Act did not apply in this case. The court also held that the companies were not necessary parties to any winding up order made in relation to them and that a winding up order could not take effect at the same time as an order for the reinstatement of a deregistered company.

Orders

Orders of the court

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Background

Background to the litigation

The plaintiff, Mr Gary Binetter wishes to set aside the orders for the winding up of the companies and the appointment of the liquidator. He relies on his standing as director which, after the reinstatement of the companies on 11 March 2011, was also reinstated as and from the time of the reinstatement. The application is made under s 471A of the Corporations Act 2001 (Cth) and s 23 of the Federal Court of Australia Act 1976 (Cth).Subsections 471A(1) and 471A(1A) together require a director to have the leave of the Court (or the liquidator) to exercise a function or power as an officer of the company. BackgroundApplication for reinstatement of registration and winding up The companies had been voluntarily deregistered in 2006. Their reinstatement was sought by the Commissioner of Taxation. At the hearing of the Commissioner’s application Mr Binetter was given leave to be heard and was represented at that hearing by counsel instructed by Argyle Lawyers.The transcript of the hearing before Jagot J shows that Mr Binetter adduced evidence, cross-examined witnesses and made extensive submissions. The orders sought by the Commissioner were made on 16 December 2010. They were stayed, initially until 17 December and then for 21 days to enable Mr Binetter to file and serve his application for leave to appeal and to be joined as a party to any appeal.Application for leave to appeal from winding up orders Mr Binetter’s application for leave to appeal was dismissed by Perram J on 4 March 2011 on the basis that he did not have standing: Binetter v Deputy Commissioner of Taxation [2011] FCA 184. His Honour held, at [7], that “a director may pursue an appeal against a winding up order in the name of a company if she first obtains leave under s 417A(1A)(d)”. Perram J noted, however, that Mr Binetter was not seeking leave under that subsection:Instead, he brings the application for leave to appeal as a third party affected by the orders and, on that application, his status as a director is fortuitous and, one might have thought, irrelevant. Perram J held that as Mr Binetter was not a party to the proceeding before Jagot J he would have standing to seek leave to appeal if he was “aggrieved” or “sufficiently interested”. His Honour rejected the submissions made on Mr Binetter’s behalf on this point and said at [13]-[15]:Viewed from the individual director’s personal perspective, the fact that he is a director of a company does not engage, by itself, any particular interest in the question of whether the company is wound up. Of course, he does have the function of appealing in the company’s name against a winding up order, but this function is not a personal interest generating standing. Rather, it is a representative function regulated by s 471A. It follows, in those circumstances, that it is merely the possibility that Mr Binetter may become involved in a liquidator’s investigation and its downstream consequences that is said to aggrieve him.I do not think that such an interest suffices. Granted the breadth of the concept of aggrievement, this interest is too remote. If it were sufficient, it would mean that any person who might be examined by a liquidator or subject to such a liquidator’s investigation would have standing to seek leave to appeal against a winding up order. The potential for a winding up order to be exposed to such a broad range of putative appellants and the obvious risk that this would pose to the orderly conduct of the winding up mean that mere membership of the class of the potentially investigated cannot suffice for standing purposes. In that circumstance, I do not accept that Mr Binetter has standing to seek leave to appeal.Mr Binetter’s application for leave to appeal from Perram J’s orders

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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