AMP General Insurance Ltd v Victorian WorkCover Authority

SALIENT FACTS

1. On 18 February 1998, Newcastle United was registered.
2. Until around 2001, Newcastle United was owned and controlled by the Newcastle Knights rugby league team and operated a licensed sports club known as the "Newcastle Knights League Club" on premises located at 2-12 Bryant Street, Adamstown, New South Wales (Premises). Newcastle United offered meals, alcoholic beverages, entertainment and access to sports and gaming facilities to patrons as part of this business.
3. In around 2001, Mr Constantine was approached by Ian Bonnette, the then chief executive officer of the Newcastle Knights rugby league team and director of Newcastle United, who said that Newcastle United was experiencing financial difficulties. Mr Bonnette asked whether Mr Constantine would be interested in taking over Newcastle United and operating its business.
4. During 2001, a transaction then took place pursuant to which Almona acquired the Premises and leased the Premises to Newcastle United, and Mr Constantine became a director of Newcastle United, which he remained until Newcastle United was deregistered in January 2024.
5. On about 6 April 2001, Almona advanced approximately $1.4 million to Newcastle United to assist it with its working capital requirements, including for the acquisition of furniture, fittings and gaming machines. Since that time, Almona has provided financial support to Newcastle United by making loans to it as required.
6. From 1998 until it was deregistered in January 2024, Newcastle United continued to operate the licensed sports club business at the Premises, except from about August to October 2021 when there were New South Wales government mandated shutdowns during the COVID-19 pandemic and it was unable to trade. Newcastle United did not receive any assistance from the New South Wales government during the shutdowns.
7. In around November 2021, Newcastle United recommenced trading at the Premises, but business was slow to pick up because only a limited number of patrons were permitted on the premises in line with the New South Wales government's "per square metre" rule, only vaccinated patrons were permitted to be there and a large portion of the regular patrons of Newcastle United were elderly people vulnerable to COVID-19 who were reluctant to visit indoor venues. The shutdowns and restrictions had an adverse impact on the income of Newcastle United. Mr Constantine's focus was on ensuring that Newcastle United could continue to trade and pay wages to its employees.
8. During the period from 12 September 2021 to 1 February 2024, ASIC sent five separate notices to Newcastle United in respect of fees totalling $6,569.78 associated with the appointment or cessation of an officeholder and the ASIC industry funding levy.
9. Mr Constantine stated that he did not receive the first ASIC notice dated 12 September 2021 because it was sent to his previous residential address in Glenwood, New South Wales, which he left in June 2017. Mr Constantine also deposed that he failed to update the ASIC records about the change in Newcastle United's address because he was involved in complex and lengthy litigation for Almona between February 2016 and July 2023, which distracted him because it was so traumatic for him and his family with significant financial consequences for them.
10. In August 2022, Mr Constantine became aware that there were outstanding fees owing by Newcastle United to ASIC. Mr Constantine asked his wife, Anastasia Constantine, to contact ASIC and request a copy of any outstanding notices. At that time, Mr Constantine received a copy of the 12 September 2021 notice. Mr Constantine was surprised by the size of the $3,698 outstanding fee in that notice for the lodgement of a document for the appointment or cessation of a company officer, so he asked his wife to check with ASIC whether the fee amount was correct. The issue concerning that notice was not resolved and the fees were not paid.
11. The other four ASIC notices were respectively dated 30 January 2023, 1 May 2023, 2 November 2023 and 1 February 2024, with each addressed to 18 Bryant Street, Adamstown, New South Wales. This is not the postal address for the Premises, but is the address of a carpark adjacent to the Premises. The proper address for the ASIC notices should have been 2-12 Bryant Street, Adamstown, New South Wales. Mr Constantine does not know who advised ASIC of the incorrect address but suspects it may have been the accountant for Newcastle United.
12. On 14 January 2024, Newcastle United was deregistered by ASIC due to its failure to punctually pay fees owing to ASIC. As at that date, the directors of Newcastle United were Mr Constantine and Anthony Tobin.
13. Mr Tobin has not been able to focus much on the club as often as he would like because of his own health problems and acting as carer for his ill wife. Mr Tobin does not consent to be reappointed as a director of Newcastle United if it is reinstated and it is proposed that he be removed.
14. Mr Constantine swears that as at 14 January 2024, Newcastle United was operating and was able to and remains able to pay all of its debts as they become due and payable.
15. From 15 January 2024, Mr Constantine caused Newcastle United to cease operating its business to commence the first stage of the refurbishment of the Premises whilst this application for the reinstatement of Newcastle United is determined.
16. On 1 February 2024, ASIC sent a letter to Mr Constantine indicating that because, on reinstatement, Newcastle United would not meet the requirements under ss 201A and 204A of the Corporations Act for the minimum number of directors and secretaries, any reinstatement application would have to be made to the court for an order that ASIC reinstate Newcastle United.
17. On 29 April 2024, a circulating resolution was passed for the appointment of Mr Constantine, Mrs Constantine and Christopher McDougall as directors of Newcastle United upon reinstatement.
18. The current amount owing by Newcastle United to Almona is $3,331,997, which is not yet due and payable.
19. Newcastle United has aged payables comprising AGL of $746 per fortnight, GEMTECH for $500 fortnightly, Sagacity Gaming Pty Ltd for $2,000 monthly, Bizcover for $132.41 monthly and Sky Channel Pty Ltd for $580 monthly. Mr Constantine has sworn that he will cause Newcastle United to pay these debts as due and payable within 14 days of the reinstatement of Newcastle United.
20. Newcastle United employed five permanent staff before its deregistration, who have since been employed by Almona to assist with the renovation of the Premises. Those staff will be re-employed by Newcastle United if it is reinstated.
21. If Newcastle United is not reinstated, the regular patrons will not have a place to meet and socialise, the local small suppliers will be affected and Almona will not be able to recover its considerable loans to Newcastle United.
22. Mr Constantine has caused to be paid to ASIC the amount of $6,569.78 in respect of the outstanding fees. Mr Constantine has confirmed that if Newcastle United is reinstated, he will manage it and will ensure that all statutory records are brought up to date, including the lodgement with ASIC of a notification of registered office and any outstanding annual returns for Newcastle United.

LEGAL PRINCIPLES

1. Section 601AH(2), (3) and (5) of the Corporations Act relevantly provide: (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: (a) … (b) the Court makes an order under subsection (2); the Court may: (c) validate anything done during the period: (i) beginning when the company was deregistered; and (ii) ending when the company's registration was reinstated; and (d) make any other order it considers appropriate. … (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 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.
2. Section 601AD of the Corporations Act deals with the consequences of deregistration, relevantly providing: Company ceases to exist (1) A company ceases to exist on deregistration. Trust property vests in the Commonwealth (1A) On deregistration, all property that the company held on trust immediately before deregistration vests in the Commonwealth. If property is vested in a liquidator on trust immediately before deregistration, that property vests in the Commonwealth. This subsection extends to property situated outside this jurisdiction. Other company property vests in ASIC (2) On deregistration, all the company's property (other than any property held by the company on trust) vests in ASIC. If company property is vested in a liquidator (other than any company property vested in a liquidator on trust) immediately before deregistration, that property vests in ASIC. This subsection extends to property situated outside this jurisdiction. Rights and powers in respect of property (3) Under subsection (1A) or (2), the Commonwealth or ASIC takes only the same property rights that the company itself had. If the company held particular property subject to a security or other interest or claim, the Commonwealth or ASIC takes the property subject to that interest or claim. (3A) The Commonwealth has, subject to its obligations as trustee of the trust, all the powers of an owner over property vested in it under subsection (1A). (4) ASIC has all the powers of an owner over property vested in it under subsection (2).
3. The legal principles concerning a reinstatement application are well established, being as follows: 1. The question whether an applicant under s 601AH(2) is a "person aggrieved by the deregistration" is considered by reference to legal rights and legal interests: Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd (2010) 80 ACSR 670; [2010] NSWSC 1369, Barrett J at [43], approved in Re LCW Property Holdings Ltd (deregistered) [2020] NSWSC 71, Gleeson J at [17]. 2. The concept of a "person aggrieved by the deregistration" is of wide import, should be construed liberally and includes a person who has been damaged in a legal sense: In the matter of European Metal Recyclers Pty Ltd (in liq) (deregistered) [2018] NSWSC 946, Gleeson JA at [17], citing Blazai Pty Ltd v Gateway Development (St Marys) Pty Ltd [2009] NSWSC 800, Tamberlin AJ at [22]. 3. A "person aggrieved by the deregistration" includes someone who has a genuine grievance because a company's dissolution has extinguished a right of some value or potential value, including a right to bring proceedings against the company or to bring a claim by the company against a third party: Re Likehart Pty Ltd (deregistered) [2017] NSWSC 884, Black J at [18]; LCW Property at [21]; In the matter of Human Group Pty Ltd; In the matter of A.C.N. 137 384 662 Pty Ltd [2023] NSWSC 28, Black J at [7]. 4. In cases where the company is insolvent, neither a shareholder nor director is a "person aggrieved by the deregistration" because, as a consequence of the insolvency, the shareholder has no asset of any value and the director's office was displaced by the liquidator: European Metal, Gleeson JA at [18] citing Melluish v Underwood Development Pty Ltd [2004] NSWSC 429, Barrett J at [6]. 5. The question of whether it is just that the company's registration be reinstated involves a broad discretionary judgment of the court, the relevant considerations for which include the circumstances in which it was deregistered, the purpose of the person aggrieved in seeking its reinstatement, whether any person is likely to be prejudiced by its reinstatement and the public interest generally: Re ERB International Pty Ltd (deregistered) (2014) 98 ACSR 124; [2014] NSWSC 200, Brereton J at [5]; LCW Property at [16] and [22]-[28]; Human Group at [9]. 6. On an application for reinstatement, the court is concerned with the justice of reinstating the company, not the justice of any proceedings which it is proposed that the reinstated company might institute or resume: ERB International at [10] citing the Victorian Court of Appeal in AMP General Insurance Ltd v Victorian WorkCover Authority (2006) 15 VR 175; [2006] VSCA 236 at [35]; applied in LCW Property at [22]. 7. It is often not appropriate in an application for reinstatement to go into factual matters which may be the subject of dispute: Pilarinos v Australian Securities and Investments Commission (2006) 24 ACLC 775; [2006] VSC 301, Gillard J at [22]; Deputy Commissioner of Taxation v Australian Securities and Investments Commission; Re Civic Finance Pty Ltd (deregistered) (2010) 81 ATR 456; [2010] FCA 1411, Jagot J at [14], applied in LCW Property at [20]. 8. The effect of reinstatement is that the former directors and secretary automatically resume office as directors and secretary of the company by reason of the operation of s 601AH(5) of the Corporations Act: LCW Property at [27], citing Mitzev v Foxman (2007) 13 BPR 24,989; [2007] NSWCA 273, Basten JA (Tobias and McColl JJA agreeing) at [25]. 9. It would not be just to reinstate a company which would then be devoid of proper governance and in the absence of evidence that the former directors and officers would be willing to resume their responsibilities, they should be presumed to be unwilling: CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd (2006) 201 FLR 296; [2006] NSWSC 690, Barrett J at [9]. 10. The power of the court in s 601AH(3)(d) of the Corporations Act to "make any other order it considers appropriate" must be exercised having regard to all of the circumstances of the particular case and the broader context of the operation of the Corporations Act: Commissioner of Taxation v Iannuzzi (No 3) [2024] FCA 45, Markovic J at [215].

CONSIDERATION

1. By virtue of the operation of s 601AD(2) of the Corporations Act, on the deregistration of Newcastle United its property vested in ASIC. Almona is a creditor of Newcastle United who is owed a significant amount of money, which is a right of value extinguished by the deregistration of Newcastle United. As a result, Almona is a "person aggrieved by the deregistration" of Newcastle United.
2. As Newcastle United was solvent when it was deregistered and will be solvent on its reinstatement based on the continued financial support from Almona, there is utility in it being reinstated because it can continue to operate its sports club business. This means that it can re-employ its five former employees, trade with local businesses and provide a venue for members of the local community to meet and socialise.
3. I have given particular consideration to the proper governance of Newcastle United if it is reinstated. There have been significant failures of governance in the past. If it is reinstated, I am satisfied that Newcastle United will have three informed and consenting directors appointed (Mr Constantine, Mrs Constantine and Mr McDougall, with Mr Tobin to be removed), Mr Constantine will be managing Newcastle United, the statutory records of Newcastle United will be brought up to date, the amounts owing to ASIC will have been paid and outstanding lodgements with ASIC will have been made.
4. I am also satisfied that ASIC does not oppose the reinstatement of Newcastle United.
5. Taking into account all of these considerations in the circumstances outlined above, I consider that it is just that Newcastle United's registration be reinstated.

ORDERS

1. For the reasons set out above, I propose to order: 1. Order pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission reinstate the registration of Newcastle United Sports Club Ltd (ACN 081 616 113). 2. Make no order as to costs, with the intent that each party bear their own costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 May 2024