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Judgment - EX TEMPORE

1. By Originating Process filed by leave on 15 August 2014, Mr Andrew Schofield applies for an order under s 601AH of the Corporations Act 2001 (Cth) to reinstate Frozen Puppies Dot Com Pty Ltd ("Company"). That application is brought in order to join the Company as a defendant in proposed proceedings, to which I will refer below. The Australian Securities and Investments Commission ("ASIC") is joined as a defendant in the proceedings. ASIC has been provided, albeit only today, with a copy of the Originating Process and an unsworn affidavit of Mr Schofield in support of the application, and subsequently with a sworn copy of that affidavit. It appears that ASIC has indicated that it cannot confirm by letter whether it will oppose the orders sought by Mr Schofield until a sealed originating process is served upon it. Given the urgency of the application, Mr Schofield has not delayed to take that step. There is no evidence that the application has been served upon, and it is not suggested that it has been served upon, the former officers of the Company. I will return to the significance of that matter, and steps which may appropriately be taken to address it, below.
2. The application is supported by an affidavit of Mr Schofield dated 15 August 2014. It appears that Mr Schofield has been involved in breeding and racing greyhounds and, in August 2008, he was the owner of a female greyhound named Supreme Instinct and made arrangements for her to be served with semen extracted from another greyhound named Bombastic Shiraz. It is alleged that the Company was contracted to perform the insemination at a time that Supreme Instinct was nine years of age and that was the last time that she could be impregnated. The impregnation took place and Supreme Instinct gave birth to three live puppies. It appears, from a DNA analysis subsequently undertaken for one of those puppies, that the puppies were primarily Dalmatian rather than purebred greyhounds.
3. That raises the possibility, at least, that an error was made in the insemination process, so as to give rise to that result, although Mr Macarounas, who appears for Mr Schofield, has properly acknowledged in the course of submissions that there may be, depending upon the evidence which emerges at a hearing, other possible explanations for the outcome.
4. The claim against the Company is of some significance to Mr Schofield, so far as one potential claim which is articulated is a claim in bailment, in respect of a bailment of Supreme Instinct to the Company for the purposes of performing the insemination, in which Mr Schofield would rely on a reversal of onus so as to put the Company in a position where it, as bailee, was called upon to explain the relevant events.
5. The application is brought in circumstances of some urgency, because it appears that the relevant insemination took place in about August 2008, and it is at least arguable that the limitation period would run from that date. The proposed Statement of Claim dates the events with somewhat greater precision than Mr Schofield's affidavit, referring to an insemination agreement entered on or about 29 August 2008 with the Company, suggesting that there may be two weeks before the limitation period might potentially expire in respect of a claim against the Company. It must also be recognised that there has been a substantial delay in the commencement of the proceedings, and no real explanation is offered as to why the proceedings are only now to be commenced, shortly before the expiry of the limitation period.
6. There is evidence, in Mr Schofield's affidavit, that the Company was deregistered under s 601AA of the Corporations Act, on 1 June 2011. That section relevantly provides for the voluntary deregistration of a company, if its members agree to the deregistration, it is not carrying on business, its assets are worth less than $1,000 and it has no outstanding liabilities and is not party to any legal proceedings. A form of application for voluntary deregistration dated 18 March 2011 and lodged with ASIC on 21 March 2011 is in evidence, by which a director of the Company declared that each of those matters was satisfied.
7. Mr Schofield's evidence is that, given the nature of the Company's business, which at the relevant time was as a clinic providing services for the insemination of dogs and other veterinary services, he believes that it would possess either a public liability or professional indemnity policy which would respond to the loss which he claims. He notes that he has not been able to, and his solicitors have not been able to, verify the existence of a policy of insurance where the Company was not wound up in insolvency and a liquidator was not appointed. It is, of course, entirely plausible, and perhaps probable, that the Company would possess professional liability insurance, for the reasons that Mr Schofield notes. However, it is plainly not possible for Mr Schofield to commence proceedings against the insurer under s 601AG of the Corporations Act where the identity of that insurer is not presently known.
8. With this background, I turn to the relevant principles, which are well-established. Section 601AH(2) of the Corporations Act relevantly provides that the Court may make an order that ASIC reinstate the registration of a company if an application for reinstatement is made by a person aggrieved by that deregistration and the Court is satisfied that it is just that the company's registration be reinstated. The effect of an order for reinstatement is that the company is taken to have continued in existence as if it had not been deregistered, and a person who was a director of the company immediately before deregistration becomes a director again as from the point at which ASIC reinstates the company, in accordance with the Court's order.
9. The terms of the relevant section require that Mr Schofield establish two matters, each of which has been addressed by Mr Macarounas in submissions. The first is that Mr Schofield is a person aggrieved, and the second is that the Court is satisfied that it is just that the Company's registration be reinstated. The matters relevant to whether it is just that the Company be reinstated include, relevantly, the future activities of the Company if an order is made and whether any person is likely to be prejudiced by the reinstatement: Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; (2000) 174 ALR 688 at [27]ff; Wedgewood Hallam Pty Ltd v Australian Securities and Investments Commission; Re Combined Building Consultants Pty Ltd [2011] FCA 439 at [5].
10. It seems to me that Mr Schofield is a person aggrieved by the deregistration for at least two reasons. First, he has a cause of action which is arguable in respect of the relevant events, although I accept that it may not succeed if it is ultimately established that there is some other cause for those events. He will be deprived of the ability to pursue that cause of action unless the Company is reinstated so that proceedings may be filed prior to the expiry of the limitation period. Second, he would be deprived of potential access to any insurance held by the Company in respect of his cause of action, unless the Company is reinstated so that the identity of that insurer can be established, and any proceedings may be brought as to which the policy of insurance may respond. I am satisfied that, for those reasons, Mr Schofield is a person aggrieved by the deregistration for the purposes of s 601AH(2)(a) of the Corporations Act, and I note that persons seeking to bring proceedings against a deregistered company are commonly treated as persons aggrieved in applications of this character: for example, Re Combined Building Consultants Pty Ltd (above) at [6]-[7]; Donmastry Pty Ltd v Albarran [2004] NSWSC 632; (2004) 49 ACSR 745 at [4].
11. I add, for completeness, that the possibility that an insurer might exist against whom a claim might be brought directly, were it possible to identify that insurer, under s 601AG of the Corporations Act, has not been treated as a reason why reinstatement should be refused, if there is uncertainty as to the availability of such a claim: Arnold v Poltane Pty Ltd [2005] FCA 1418 at [4], [8]; Re Combined Building Consultants Pty Ltd above at [9].
12. The second question is whether it is just that the Company's registration be reinstated. A number of relevant matters were identified by Gordon J in determining a similar application in Re Combined Building Consultants Pty Ltd above, including, relevantly, that the company was administratively deregistered by ASIC under s 601AA of the Corporations Act following a decision of its members and not as a result of a detailed inquiry into its affairs; that there was no suggestion that the company in that case was insolvent at the time that it was deregistered; the proposed claim appears to raise a serious question to be tried; and there was at least a possibility that the company in that case had insurance in relation to such a claim. Each of those matters, which warranted an order for reinstatement in that case, are also present in this case. In that case, her Honour also noted that there had been a significant delay in making the application for reinstatement, a matter which is plainly also present in this case, but held that notwithstanding that delay, and notwithstanding that the relevant professional indemnity insurer had not been identified, it was just that the company in that case be reinstated. That decision has recently been followed by Wigney J in the Federal Court of Australian in James v Leighton Holdings Ltd [2013] FCA 1115 at [16].
13. I recognise that there is, of course, a balancing exercise involved in an application for reinstatement of this kind. On the one hand, a refusal to reinstate the Company would bring about the loss of Mr Schofield's cause of action against it. On the other hand, a reinstatement has the consequences that officers of the Company who have ceased to occupy that position are restored to it, in circumstances where that is not a matter of their choice. That draws attention to another aspect of this application, which is that it has not been served upon those persons, as may have been desirable in the relevant circumstances. However, I accept that there is urgency in the application and that, where a limitation period may expire in the near future, it is not desirable that the application be deferred in order to seek to effect service upon the officers of the Company prior to a hearing of the application.
14. It seems to me that ASIC's interests, to the extent that it has not yet formed a view as to the application, and those officers' interests may properly be preserved by an order being made on terms that any interested person, who would relevantly include ASIC and such officers, may move to set it aside within a specified period, which in the present case would appropriately be 14 days.
15. Having regard to the fact that the Company was deregistered by administrative action and does not appear to have been insolvent at the time of deregistration, so far as a form was filed with ASIC indicating that it then had no liabilities; Mr Schofield has an arguable claim against the Company which would be defeated if it were not reinstated, and the claim in respect of bailment which may be of advantage to him in respect of the proceedings he seeks to bring; and there is at least a possibility or probability that the Company would be insured against the relevant liability, although the insurer has not yet been identified, I am satisfied that it is just that the Company's registration be reinstated, although I will reserve the ability for ASIC and any interested person to move to set aside that order as I have noted above, where they have not been heard in respect of this application.
16. I therefore make the following orders:
17. The defendant, the Australian Securities and Investments Commission be directed to reinstate the registration of Frozen Puppies Dot Com Pty Ltd ACN 118 354 411 pursuant to s 601AH of the Corporations Act 2001;
18. Direct that the originating process and affidavit in support be served by facsimile or email upon the Australian Securities and Investments Commission by 6 pm today, 15 August 2014, and as soon as possible upon each former officer of the Company at the last address known to the plaintiff for each such officer.
19. The Australian Securities and Investments Commission and any interested person have liberty to apply to set aside these orders within 14 days.
20. These orders be entered forthwith.