AMHC, Inc. v Australian Securities and Investments Commission

Federal Court of Australia|2022-07-29|Before: Cheeseman J

Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth), the Defendant reinstate the registration of Streaming Media Australia Pty Limited ACN 091 189 776.
Pursuant to s 601AH(3)(d) of the Corporations Act 2001 (Cth), that upon the reinstatement of the registration of Streaming Media Australia Pty Limited ACN 091 189 776 by the Defendant, Alfred John Stamp be removed as a director of Streaming Media Australia Pty Limited ACN 091 189 776.
No order as to costs.

THE COURT NOTES THAT:

Order 1 is made on the basis that the following resignations as directors will be effective immediately upon the reinstatement of the registration of Streaming Media Australia Pty Limited ACN 091 189 776 by the Defendant: a. resignation as director of Streaming Media Australia Pty Limited ACN 091 189 776 of Ms Tiffany Fuller dated 14 December 2021; and b. resignation as director of Streaming Media Australia Pty Limited ACN 091 189 776 of Mr Paul Andrew Zuber dated 12 April 2022. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BACKGROUND 3 In two current legal proceedings in the United States, one in the District Court for the West District of Texas, and the other in the District Court of California, Microsoft Corporation (Microsoft) and Akamai Technologies Inc (Akamai) respectively have challenged the plaintiffs' title to the US Patents (together, the US Legal Proceedings). It appears that the challenge to the plaintiffs' title is based on the contention that SMA failed to transfer title to the relevant inventions prior to being deregistered. Microsoft and Akamai seek declaratory and injunctive relief. In the US Legal Proceedings, Microsoft and Akamai do not claim that either of them, or any other entity, have a proprietary interest in the intellectual property that is the subject of the US Patents. Rather, they seek declaratory relief to the effect that the plaintiffs do not have title to the relevant property and/or that their use does not constitute an infringement of the US Patents. 4 As mentioned, the plaintiffs seek reinstatement of SMA in order to confirm and remove any doubt as to their respective claims of title. It is proposed that upon reinstatement, SMA will execute a deed of assignment between SMA and AMHC which confirms the transfer of any residual interest SMA has in its assets, including but not limited to the applications for the patents in issue, to AMHC. Directors willing to execute the proposed confirmatory transfer have given affidavits in support of the application. No other party claims any proprietary interest in the patents. 5 At the time of its deregistration, SMA did not have any creditors. 6 The plaintiffs did not initially join ASIC as a defendant. Timetabling orders were made to permit the plaintiffs to join ASIC as a defendant and to enable ASIC, if joined, to lodge evidence and submissions. 7 ASIC, having been informed of the application and after being joined as a party, confirmed in correspondence that it consented to being placed before the Court, that the requirements of Regulatory Guide 83 had been satisfied by the plaintiffs, and that provided that no costs order was sought against it, it did not oppose the application. ASIC did not enter an appearance and did not seek to be heard on the application. 8 At the time SMA was deregistered, SMA had five directors. The plaintiffs have informed each of the former directors of the application to reinstate SMA. Four of the former directors engaged in communications with the plaintiffs and/or their representatives in relation to the application. One of the directors has not responded. 9 If SMA is reinstated, the plaintiffs have proposed that the Court make ancillary orders to give effect to, and notations which recognise, the following arrangements. 10 First, two of the former directors, Messrs Morris and Connelly, cognisant of the operation of s 601AH(5) of the Act, have consented to stand as directors of SMA upon its reinstatement. 11 Secondly, upon reinstatement of SMA, each of the remaining three directors will cease to act as a director. Two of these directors have confirmed that they wish to resign effective immediately upon SMA being reinstated and have tendered signed resignations. The remaining former director has not responded to any communications from the plaintiffs and their legal representatives sent to his last known email address and to the most recent address recorded on an ASIC Personal Name Search for him. Accordingly, the plaintiffs seek an order pursuant to s 601AH(3)(d) of the Act, that upon the reinstatement of the registration of SMA by ASIC, that director be removed as a director of SMA. 12 The evidence demonstrates that Messrs Morris and Connelly have consented to stand as directors of SMA for a limited period of time and to appoint the former secretary of SMA, Mr Kuiper, as a director, pursuant to s 201H of the Act. Mr Kuiper has consented to being appointed as a director upon SMA's reinstatement. Secondly, if appointed as a director of SMA, Mr Kuiper will: (1) attend to the payment of fees payable to ASIC in respect of SMA; and (2) execute a deed of assignment between SMA and AMHC in the terms outlined at [4] above. 13 A copy of the deed of assignment which Mr Kuiper intends to execute if he is appointed as a director is in evidence. 14 At the time of its deregistration, SMA had one shareholder, Conferserv Australia Pty Limited (Conferserv Australia). Conferserv Australia was deregistered on 21 December 2003, the same date as SMA. 15 This application was attended by some urgency because applications in the nature of contested motions to strike and dismiss are pending and may shortly be determined in the US Proceedings. 16 On 29 July 2022, I heard the application and made orders substantially in accordance with the prayers for relief in the amended originating application in the proceedings, supplemented by the ancillary order and the notation outlined at [9] to [11] above. These are my reasons for making the orders.

evidence on the application 17 The plaintiffs relied on the following evidence in support of their application to reinstate SMA: (1) an affidavit of Stephen Edward Villoria, the president and chief executive officer of both applicants, affirmed on 1 July 2022, and exhibit SEV-1 to that affidavit; (2) an affidavit of Ronald Lee Spector, a former director of Conferserv Australia (the sole shareholder in SMA at the time of its deregistration on 21 December 2003), affirmed on 20 July 2022, and exhibit RLS-1 to that affidavit; (3) an affidavit of Brett John Morris, a former director of SMA, affirmed on 18 July 2022 and exhibit BJM-1 to that affidavit; (4) an affidavit of James Taco John Kuiper, the former company secretary of Conferserv Australia and SMA, affirmed on 20 July 2022, and exhibit JTJK-1 to that affidavit; and (5) an affidavit of Claire Elisabeth Harford, solicitor for the plaintiffs, affirmed on 26 July 2022.

chain of title 18 The critical context for the present application is the chain of title relating to the intellectual property the subject of what became the US Patents. The evidence on this application establishes that the plaintiffs each have, at least, an arguable claim to a proprietary interest in the intellectual property that is the subject of the US Patents. 19 AMHC's claim ultimately derives from an assignment. MediaPointe's claim ultimately derives from the grant of "an exclusive, sublicensable, royalty-free, fully paid-up, perpetual, right and license" which includes, inter alia, the right to sue for patent infringement. 20 Despite some gaps in the documentation, and typographical errors and or misnomers, the evidence on this application demonstrates that it is reasonably arguable that the chain of transactions leading to the final assignment to AMHC and licence to MediaPointe was broadly as follows. 21 First, the original inventors, Ben Lear of Mudgee and Joseph Hayes of Frenchs Forest, assigned their rights to the invention to SMA. They are the named inventors in each of the US Patents. On 11 January 2000, the AU Application was filed naming Mr Lear and Mr Hayes as applicants and inventors. The PCT Application was filed on 11 January 2001. In it, SMA was named as the applicant and Mr Lear and Mr Hayes were named as the inventors. 22 On 13 January 2000, SMA was incorporated under its then name, Notron (No 325) Pty Limited. Mr Lear and Mr Hayes and others were directors of SMA. Mr Lear was a director from 14 January 2000. Mr Hayes was a director from 13 March 2000. 23 By document dated 14 January 2000, SMA agreed to issue shares to Mr Lear, Mr Hayes and the others in consideration of Mr Lear and others (but seemingly not Mr Hayes, who is not named as a party) transferring to SMA all their right, title and interest in the business conducted under the business name "Streaming Media Australia", including "all intellectual property, such as rights in the provisional patent titled 'A Method for Distribution of Streamed Data Packets on a Switched Network Utilising an Intelligent Distribution Network'". Included in that document is a statement that the parties "agree to enter into a formal agreement continuing the terms and conditions of this letter with the Company within 7 days from the date of this letter". On 19 January 2000, SMA's change of name from Notron (No 325) Pty Ltd to Streaming Media Australia Pty Ltd was recorded. 24 In March 2001, Mr Lear and Mr Hayes (each described as "the Developer") entered into identical deeds with SMA. The deeds included an acknowledgement of the Developer's intention in respect of the earlier assignment to SMA - the Developer acknowledged that they "intended to assign all legal and beneficial right, title and interest in and to the Intellectual Property Rights in the Relevant Intellectual Property to the Company pursuant the document set out in Annexure A". Annexure A was the document dated 14 January 2000, that is referred to at [21]. To the extent that the earlier assignment was ineffective, the deed also included a further assignment of the Developer's relevant rights to SMA. In addition, the Developer assigned to SMA any right the Developer "has, had or will have to take any action against any third party for infringement of the Relevant Intellectual Property". The definition of Relevant Intellectual Property encompassed "the Invention", which was defined to include "the invention described as 'A method for distribution of streamed data packets on a switched network utilising an intelligent distribution network" and "any earlier versions of that invention") (pursuant to clause 1) and "the international patent application set out in the Schedule and any other patent applications of which the Invention is the subject" (pursuant to clause 1.16). The Schedule listed the PCT Application. 25 Secondly, SMA appears to have intended to transfer its rights to the patents/invention to Conferserv, Inc. (CSI), a company incorporated in Delaware in 2003. This transfer was part of a reasonably complex restructure designed to migrate the business from Australia to the United States and involved SMA shareholders effectively swapping their shares in SMA for shares in CSI. SMA became a subsidiary of Conferserv Australia, which in turn was a subsidiary of CSI. Transfer instruments documenting the transfer of title from SMA to CSI have not been located. Nevertheless, the surrounding facts and circumstances, including contemporaneous documents relating to the restructure, give rise to at least an arguable inference that the mutual intention of the parties to the SMA restructure was that SMA's interest in its assets, including the PCT Application and the US Patents, be transferred to CSI to give effect to the migration of the business conducted using the inventions from SMA in Australia to CSI in the United States. 26 The evidence of CSI's then CEO, Ron Spector, Mr Morris (a director at the relevant times) and Mr Kuiper (secretary at the relevant times) is to the effect that it was the intention of the parties that all assets of SMA would be transferred to CSI with no residual interest left with SMA to forfeit upon its deregistration. For the purpose of this application, the plaintiffs have established that it is, at the least, arguable that an asset sale agreement or other assignment should have been executed to complete the migration of SMA's assets to CSI. 27 After the restructure had been implemented, both SMA and Conferserv Australia were deregistered on the basis that they were not carrying on business and the company's assets were worth less than $1,000. If, in fact, SMA still owned the rights to the PCT Application, the basis on which it had applied for voluntary deregistration would be false. That asset is unlikely to have been valued at less than $1,000. The evidence on this application demonstrates that a fundamental basis for the significant investments in SMA and, later, CSI was to develop and exploit the rights to the invention the subject of the PCT Application. The shareholders in SMA gave up their shares and interests in SMA in return for shares and interests in CSI. Each of CSI, Conferserv Australia, SMA and their shareholders and officers appear to have been proceeding on the basis that, post-restructure, CSI was the owner of the PCT Application. 28 Thirdly, the next transfer was from CSI to Advanced Media Design, Inc. (AMDI), a company incorporated in California. In June 2011, AMHC entered into an asset sale agreement with AMDI (AMDI Asset Purchase Agreement). The AMDI Asset Purchase Agreement provided that: (a) AMDI transferred "all Intellectual Property, to the extent transferable under the Bankruptcy Code" to AMHC (by Art 1.1(c)); (b) AMDI transferred "all Government Authorizations and all pending applications thereof and renewals thereof to the extent transferable by the Seller under the Bankruptcy Code including without limitation those listed on Schedule 1.1(d)" to AMHC (by Art 1.1(d)). Schedule 1.1(d) listed "USPTO Patent Application 09/936,624 / System and Method for Distribution of Data Packets Utilizing an Intelligent Distribution Network / Original Date Filed: January 11, 2001"; (c) AMDI transferred "the items (the 'Other Assets'), if any, listed in Schedule 1.1(k)" (by Art 1.1(k)). Schedule 1.1(k) at item 5 listed "Intangible Assets - Conferserv Acquisition" with a value of $6,223 and at item 6 "Organization Costs - Conferserv Acquisition" with a value of $9,845.62. 29 On 10 September 2013, AMDI filed US patent application 14/023,435 as a continuation of US application 09/936/624 (which was later granted as the First US Patent). Application number 14/023,435 was later granted as the Second US Patent. 30 On 15 October 2013, the United States Patent and Trademark Office (USPTO) granted the First US Patent based on US application 09/936,624.64. Issue notification was dated 25 September 2013. 31 On 23 August 2016, the USPTO issued to AMDI the Second US Patent based on US application 14/023,435. 32 Fourthly, on 2 August 2021, AMHC assigned its interest in the First US Patent and the Second US Patent to MediaPointe pursuant to a document titled "Confirmatory Assignment of Patent Application/Patent". 33 Fifthly, on 25 August 2021, MediaPointe, in its capacity as "the owner of all right, title, and interest in" the US Patents, assigned the US Patents to AMHC on terms that included an immediate and exclusive licence back of the US Patents to MediaPointe. 34 Returning to the critical point, where the documentary record is lacking, on the evidence before me there appear to be three possibilities in respect of the SMA CSI link in the chain of title. First, that a written agreement does exist but it is not in the control or possession of the plaintiffs. Second, that there is no written assignment but that as a result of the circumstances concerning the restructure CSI took an equitable interest, and, at the time SMA was deregistered, SMA held the legal title. Then, by operation of s 601AD(2) of the Act, the legal title vested in ASIC. Third, that SMA was deregistered with both the legal and beneficial title to the relevant intellectual property, which has not vested in ASIC. Having regard to all three possibilities, there is utility in reinstating SMA to enable the issue of title to be addressed, and if necessary, clarified.

APPLICABLE PRINCIPLES 35 Section 601AH relevantly provides: 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. … 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. 36 The relevant principles were comprehensively reviewed by Gleeson J in Yeo v Australian Securities and Investments Commission, in the matter of Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480 at [10] to [25]. In Hogan (Liquidator) v Australian Securities and Investments Commission, in the matter of NetiveEdu Pty Ltd (Deregistered) [2021] FCA 730 I summarised the relevant principles at [30] to [33]. It is convenient to reproduce [33]: Discretion (1) The Court's exercise of discretion will be informed by an assessment of all of the relevant circumstances and each case will turn on its own facts: Yeo at [23] citing Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200 at [5] (Brereton J). (2) If the court is satisfied as to the conditions in s 601AH(2)(a) and (b), then in the ordinary course an order for reinstatement will be made: Yeo at [25] and the cases cited therein. 37 I interpolate to note that the question as to whether the Court has a residual discretion to refuse an order once it is satisfied that the applicant is a person aggrieved and it is just to make the order, has not been settled: see Workcover Authority of New South Wales v Picton Truck and Trailer Repairs Pty Ltd [2004] NSWCA 371; (2004) 51 ACSR 102, [21] to [26] (Sheller JA, Mason P and Ipp JA agreeing) cf Deputy Commissioner of Taxation; Re James Hardie Australia Finance Pty Ltd (Deregistered) (2008) 170 FCR 545; [2008] FCA 1181 at [13] (Lindgren J). I further note the recent observations of Bathurst CJ to the effect that it is difficult (in the abstract) to see how such a discretion could be properly exercised once the anterior conclusions are reached: In the Matter of Richards Contracting Co Management Pty Ltd (2021) 104 NSWLR 385; [2021] NSWCA 34 at [107] (Bathurst CJ), (Bell P, Meagher JA, Payne JA and Emmett AJA agreeing at [122], [123],[124] and [134] respectively). 38 Returning to the summary of principles from Hogan at [33]: A person aggrieved by the deregistration (3) The expression "a person aggrieved by the deregistration" should not be narrowly construed: Yeo at [14] - [20] and the cases there cited. (4) In order to assess whether the plaintiff is an aggrieved party it is not necessary to embark on a detailed and exhaustive analysis of the facts and law underpinning the claim. The threshold is low and the assessment need to be dealt with in a summary way: Yeo at [14] citing Re Brockweir Pty Ltd [2012] VSC 225 at [22] (Sifris J). (5) Whether an applicant under s 601AH(2) is a "person aggrieved by the deregistration" is considered by reference to legal rights and legal interests. The applicant must have a genuine grievance that the dissolution of the company affected his or her interests because, for example, a right of some value or potential value has gone out of existence: Yeo at [18] citing Barrett J (at [43]) in Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd [2010] NSWSC 1369; (2010) 80 ACSR 670 in turn citing Austin J (at [24] - [26]) in Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; (2000) 174 ALR 688 (ACCC v ASIC). (6) The nature of the applicant's interest must be sufficient to distinguish them from an officious bystander or mere busybody and is a matter to be judged in context: Yeo at [15], [19] citing Partners in Enterprise Pty Ltd v Sampson [2002] NSWSC 383 at [8] (Barrett J) and Brereton v Australian Securities and Investment Commission [2007] FCA 651 at [2] (Finkelstein J) respectively. Is reinstatement just (7) The provisions that the court "may" order reinstatement if satisfied that it is "just" to do so confers a broad discretionary judgment on the Court. Relevant considerations in the exercise of the discretion include the circumstances in which the company was deregistered, the purpose in seeking its reinstatement, whether any person is likely to be prejudiced by reinstatement, and the public interest generally. These considerations are not limitations on the Court's power: Yeo at [23] citing ERB International at [5] in turn citing ACCC v ASIC at [27] - [28]: [27] The wording of the section is very broad, and the cases confirm that it gives the court a wide discretion. The court takes into account the circumstances in which the company came to be dissolved; whether, if the order were made, good use could be made of it; and whether any person is likely to be prejudiced by the reinstatement: Re Kilkenny Engineering Pty Ltd (in liq) (1976) 1 ACLR 285; Drysdale v Australian Securities Commission (1992) 10 ACLC 1427; Re Steelmaster Pty Ltd (in liq) (1992) 6 ACSR 494. [28] These matters are only factors to be weighed in the exercise of the court's discretion. They are not limits on the court's power. Here, the reinstatement is likely to lead to the company being joined in proceedings in which the ACCC will seek orders for pecuniary penalties against it. The company may therefore be prejudiced. The court may nevertheless conclude that it is just that the company's registration be reinstated, having regard (for example) to the strong public interest which is involved. It is appropriate for the court to take into account questions of public interest in exercising its discretion under s 601AH: Re Immunosearch Pty Ltd (1990) 2 ACSR 455. (8) A matter for consideration by the Court in the exercise of the discretion is the future stewardship of the company if and when it comes back into existence: Stone v ACN 000 337 940 Pty Ltd [2008] NSWSC 1058; (2008) 68 ACSR 242 at [23] (Barrett J). 39 There is no temporal restriction in the expression "person aggrieved". What is required is that there be a causal link between the grievance and the deregistration. A person may therefore become aggrieved post deregistration: Lee v Parker [2020] FCA 1453 at [12(g)] (Griffiths J). 40 Procedural fairness must be afforded to all persons who may be affected by an order made in exercise of s 601AH, and those persons must be afforded an opportunity to be heard before the Court exercises the power: Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38 at [84] to [85] (Spigelman CJ, Tobias and Campbell JJA agreeing at [102] and [103] respectively). 41 Persons having a mere commercial interest, as distinct from a proprietary interest, in the outcome of a proceeding are not persons affected in the relevant sense. The appropriate test is whether the order for which the plaintiff is asking directly affects the relevant person in the enjoyment of his legal rights: Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357 at 386 (Devlin J); Re Great Eastern Cleaning Services Pty Ltd [1978] 2 NSWLR 278, 280 to 281(Needham J); Bradvica v Radulovic [1975] VR 434, 445 (Gillard J). 42 A person who may have a claim against them brought in consequence of a company's reinstatement is by extension a person affected by the order. A person whose claim against a person may founder in the event that a company is reinstated (because relevant rights or obligations would re-vest in the reinstated company, causing proceedings against a third party to abort) may be a person affected: Re Great Eastern, 280 to 281 (Needham J). However, a person who merely has a commercial interest in the applicant not obtaining the relevant order is not a person affected in the relevant sense.

Consideration 43 Three matters need to be considered: first, whether the application is made by a person aggrieved by the deregistration; secondly, whether the Court is "satisfied that it is just that the company's registration be reinstated"; and thirdly, whether any residual discretion as to whether to make an order should be exercised.

Are the plaintiffs "persons aggrieved"? 44 The evidence in relation to the plaintiffs' respective claims to an interest in the intellectual property the subject of the US Patents, and how those claims trace back to SMA, is summarised at [18] to [33] above. 45 Whether the plaintiffs are persons aggrieved by the deregistration is a low threshold. The description should not be narrowly construed. It is often not appropriate in an application for reinstatement to go into factual matters which may be the subject of dispute, and the assessment of whether the applicant is aggrieved may be dealt with in a summary way. The plaintiffs must have a genuine grievance that the dissolution of SMA has affected their interests. 46 AMHC has established, in a summary way, that it has a claim as the beneficial owner of the intellectual property in which SMA may have some residual interest. Similarly, MediaPointe has established that it has a claim as licensee of AMHC's interest, with a near coextensive interest in the relevant intellectual property. 47 The plaintiffs have established an arguable claim that the relevant parties' intention was that the assets of SMA should be transferred first to CSI and their mutual understanding thereafter, on which they acted in subsequent transfers, was that SMA's assets had been so transferred. Further, CSI and its successors in title, including AMDI, also acted on that understanding. In this way, the plaintiffs have demonstrated that it is at least arguable that there has been a transfer of beneficial title in the relevant intellectual property from SMA to CSI and its successors: Corin v Patton (1990) 169 CLR 540, 558 to 559 (Mason CJ and McHugh J); Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd (2012) 45 WAR 29 at [129] (McLure P). 48 Further, the plaintiffs have established for the purpose of this application that it is at least arguable that it would be inequitable for SMA to retain any residual interest in the relevant intellectual property as against CSI and its successors, having regard to CSI's and its successors' reliance on the assumption that they own the patents: Olsson v Dyson (1969) 120 CLR 365, 377 to378 (Kitto J). AMHC, as successor in title to CSI, has an arguable claim against SMA in respect of the relevant intellectual property. The deregistration of SMA makes it impossible for the plaintiffs to pursue that claim. In the circumstances of this case, that claim is likely to be resolved consensually given the readiness of the directors of SMA to facilitate entry into the confirmatory transfer of title. Even so, to give effect to that arrangement, it is necessary for SMA to be reinstated. 49 I am satisfied on the present application that, in the absence of documentation relating to the transfer from SMA to CSI, there is at least the possibility that some residual interest in the intellectual property, even if the bare legal title remained in SMA at the time of its deregistration. I am also satisfied that the plaintiffs have a claim against SMA in respect of that interest, on the basis of their contention that AMHC, through AMDI, is the successor in title to CSI. The plaintiffs have established that they are companies which, because of deregistration, have some right or potential value that has been, or may have been, extinguished, including a right to bring a claim against SMA and thereafter, potentially, against third parties for infringement. 50 Accordingly, the plaintiffs are persons aggrieved by the deregistration of SMA who have standing to seek an order under s 601AH of the Act.

Is it just that SMA be reinstated? 51 Section 601AD provides that, on deregistration, a company ceases to exist and all property that the company held on trust immediately before deregistration vests in the Commonwealth and other property vests in ASIC. 52 Section 601AH(5) provides: Effect of reinstatement 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. 53 I am satisfied that it is "just" that the company's registration be reinstated. Otherwise, the title to the relevant intellectual property will remain vested in ASIC, rather than in SMA: Re Garfox Pty Ltd [2019] NSWSC 442, [17], [19] (Rees J). The plaintiffs will be precluded from perfecting the interests they each assert in the intellectual property unless SMA is reinstated. 54 The fact that third parties (and in particular Microsoft and Akamai) may have commercial interests in SMA not being reinstated is not a reason not to make an order under s 601AH(2) of the Act. The legal rights or interests of Microsoft and Akamai are not directly affected by this application. Microsoft and Akamai do not assert that they themselves (or any other party) has title to the patents in issue in the US litigation. Emboldened by the plaintiffs discontinuing earlier US proceedings against them on a without prejudice basis, Microsoft and Akamai seized the offensive by bringing proceedings seeking declaratory and injunctive relief against, inter alia, the plaintiffs. While it is apparent that Microsoft and Akamai could derive a commercial benefit if reinstatement is refused - because that outcome would perpetuate doubt concerning the plaintiffs' title and impede the plaintiffs' attempts to enforce the legal rights they assert against Microsoft and Akamai - that commercial interest does not give rise to a right for Microsoft or Akamai to be heard on this application, and does not detract from the conclusion I have reached that it is just to order ASIC to reinstate SMA. Microsoft and Akamai may well be concerned with the perfection of AMHC's title post re-instatement, but that is not an issue which arises for determination on this application.

Matters of public policy 55 No reasons of public policy have been identified which would weigh against the reinstatement. Mr Kuiper's evidence is that any fees due to ASIC for the period during which SMA has been deregistered will, upon reinstatement, be paid immediately. The company does not have any creditors. It is not proposed that it will trade, or bring any claim against any person. 56 In my view, public policy favours the reinstatement. If it proves to be the case that the relevant intellectual property, or part of it, remained with SMA when it was deregistered, then depending on whether the property was held on trust or not then pursuant to s 601AD(1A) or s 601AD(2) of the Act, the property vested in the Commonwealth or ASIC. That consequence would appear to be unintended, having regard to the declaration made at the time of deregistration, to the effect that SMA did not have assets over $1,000 in value. 57 The plaintiffs have demonstrated, at least, an arguable case that the relevant intention of the parties engaged in the development of, and dealing in, the intellectual property was to transfer title in CSI. CSI's successors in title have proceeded on the assumption and understanding that they have title to the relevant assets. They have made significant investments for the purpose of developing the relevant intellectual property on that basis. To the extent that those investments are jeopardised by SMA having retained any residual interest in the patents, making the order for reinstatement enables the plaintiffs to address that risk. Public policy weighs in favour of enabling the means by which the reasonable expectations upon which investors relied and proceeded may be vindicated.

Residual discretion 58 It is not necessary on this application to enter the field in relation to whether the Court has a residual discretion once satisfied that the applicant is a person aggrieved and that the reinstatement of the company is just. I am satisfied in the circumstances of the present application that any such residual discretion should be exercised in favour of granting the relief sought for the same reasons as I am satisfied that the reinstatement of SMA would be just.

conclusion 59 For these reasons, I made orders substantially in accordance with the relief sought in the plaintiffs' amended originating application, supplemented to reflect the consensual arrangements between the plaintiffs, the former directors of SMA, and Mr Kuiper, who has consented to act as a director of SMA upon its reinstatement. Noting that the plaintiffs are motivated to inform ASIC of the orders made, I did not think it necessary to make an order requiring the plaintiffs to notify ASIC of the orders made on 29 July 2022. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

(2021) 104 NSWLR 385

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