Australian Competition and Consumer Commission v Australian Securities and Investment Commission

REASONS FOR JUDGMENT 1 The applicant, Australian Competition and Consumer Commission ('ACCC') seeks orders pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) ('Corporations Act') that the Australian Securities and Investments Commission ('the Commission') reinstate the registration of Dataline.Net.Au Pty Ltd (ACN 075 400 529) ('Dataline') and certain consequential orders. The Commission does not oppose the making of the orders. 2 The background facts are these. 3 On 21 December 2001, the ACCC commenced proceedings against Dataline and six other respondents alleging contraventions of the Trade Practices Act 1974 (Cth) in proceeding QUD277/2001. 4 Dataline contested the proceeding and filed a joint defence with four other respondents on 3 May 2002 and was legally represented. On 25 September 2003, Kiefel J ordered that Dataline's defence be struck out unless certain documents were provided to the ACCC. The ACCC contended that Dataline had failed to comply with the order and, as a result, Dataline's defence was struck out. The ACCC filed a notice of motion on 28 November 2003 seeking a declaration that Dataline's defence was struck out. The hearing of the motion was adjourned to enable 'without prejudice' settlement discussions to take place. On 11 October 2004, the ACCC filed an amended notice of motion also seeking a declaration that Dataline's defence was struck out and judgment against Dataline under Order 35A, r 3(2)(c) of the Federal Court Rules. 5 That motion was heard by Kiefel J on 1 and 9 December 2004. Kiefel J delivered judgment on 3 March 2005 declaring Dataline's defence struck out and found that the ACCC was entitled to judgment under the Rules. On 26 August 2005, the ACCC sought to re‑list the matter for final orders to be made. 6 On 9 September 2005, the Supreme Court of New South Wales made orders for the winding up of Dataline and the appointment of a liquidator. At that point, the ACCC's proceedings were still on foot. Although the liquidator was aware of the ACCC's proceedings, the liquidator did not give notice to the ACCC of any intention to deregister Dataline. 7 On 16 February 2006, Kiefel J heard argument as to the form of final orders to be made in the proceeding and reserved judgment. 8 On 30 March 2006, Dataline's liquidator wrote to ASIC requesting deregistration of the company under s 601AB(2)(c) of the Corporations Act. Dataline was deregistered by ASIC on 23 July 2006. The ACCC was not informed by the liquidator of the deregistration. 9 On 3 November 2006, Kiefel J gave judgment regarding the final orders in the ACCC's proceeding. Also on 3 November 2006 the court granted leave to proceed against Dataline pursuant to s 471B of the Corporations Act. Dataline's liquidator was given notice of that application by the ACCC and the liquidator did not seek to oppose the granting of leave. On or about 24 November 2006, the ACCC's solicitors became aware that Dataline had been deregistered. On 24 November 2006, the ACCC filed a notice of appeal from the orders made by Kiefel J on 3 November 2006 (Appeal QUD458/2006) and served a copy of the notice of appeal on Dataline's previous liquidator. The notice of appeal seeks an order that notwithstanding Dataline's administration and liquidation, Dataline pay a pecuniary penalty to the Commonwealth under s 76 of the Trade Practices Act 1974 (Cth). 10 On 2 January 2007, the ACCC's solicitors received a letter dated 19 December 2006 from Dataline's previous liquidator asserting that it was inappropriate for Dataline to be a party to any appeal. On 12 January 2007, the ACCC's solicitors wrote to Dataline's previous liquidator responding to the letter of 19 December 2006 and requested administrative reinstatement of Dataline's registration. That letter was returned to sender and on 19 January 2007 the ACCC's solicitors sent a facsimile to Dataline's previous liquidator attaching an index of the appeal papers and a list of documents proposed to be included in the Appeal Book. The ACCC's solicitors have received no response to that facsimile. 11 On 27 April 2007, the ACCC filed its application for the reinstatement order supported by the affidavit of David Brian Starkoff filed 23 April 2007 which deposes to the matters recited in the above chronology. On the hearing of the application I gave leave to read and file the further affidavit of David Starkoff sworn 8 May 2007. 12 The applicant says that Dataline is a party to the appeal to be heard by the Full Court next week. An issue in the appeal is whether a pecuniary penalty under s 76 of the Trade Practices Act should be imposed on Dataline in relation to its contraventions of s 48 of the Trade Practice Act. Section 601AH(2) of the Corporations Act empowers the court to reinstate the registration of a deregistered company on the application of 'a person aggrieved' by the deregistration and in circumstances where the court is satisfied that 'it is just to do so'. Having regard to the statutory role of the ACCC, it is a person aggrieved with standing to make an application for reinstatement (Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 at 692-693 [24] - [26]; 34 ACSR 232; 19 ACLC 341; [2000] NSWSC 316 per Austin J ('ACCC v ASIC). The conclusion reached by his Honour in that case is consistent with the recent observations of Heerey J in Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No. 2) [2007] FCA 444 at [92], in these terms: 'There is also the particular role and responsibility of the ACCC. It is not like a commercial corporation which will decide (quite properly) whether or not to commence litigation solely in terms of what will be to the benefit of its own interests. The ACCC exists to give practical effect to the objective as stated in s 2 [Trade Practices Act] to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. Litigation to enforce the Act is part of the ACCC's raison d'être.' 13 In ACCC v ASIC, the application for reinstatement was made in order to join a deregistered company as a defendant in proceedings taken by the ACCC in respect of contraventions of Part IV of the Trade Practices Act. Having regard to the 'important responsibility' of the ACCC in the enforcement of Part IV to be exercised in the public interest and the severity of the penalties imposed by Parliament in respect of contraventions of Part IV, Austin J was satisfied that the deregistered entity ought to be joined in the proceeding and thus exercised the power under s 601AH(2). 14 In this application, the ACCC does not seek reinstatement in order to commence litigation or join Dataline as a party. It seeks reinstatement to progress the resolution of issues on the appeal. The applicant says that Dataline is a necessary respondent to the appeal and the public interest is served by reinstating Dataline so as to enable the Full Court to determine, if appropriate having regard to the issues in the appeal, questions going to the scope of a pecuniary penalty that might be awarded against Dataline in the circumstances of the case. Thus, it is said the court ought to be satisfied that it is just to make the reinstatement order as the public has an interest in any consideration by the Full Court, if thought appropriate, of the assessment of any pecuniary penalty as a means of informing the public of the factors influencing (and the amount of) the imposition of a pecuniary penalty in a given case. Counsel for the ACCC made submissions that having regard to the insolvent status of Dataline, Kiefel J took the view in the primary proceeding that there was no utility in making any order for a pecuniary penalty. The question of whether a penalty ought to have been made and if so on what footing and to what extent is one of the questions alive in the appeal. In the appeal, the ACCC seeks an order for a pecuniary penalty against Dataline and also in respect of another respondent in the proceedings in liquidation. 15 In addition, in the proceedings before Kiefel J, the ACCC sought to retrieve and retain hard disk drives held in the Registry of the Federal Court as a result of an anton pillar order made in the proceedings in January 2002. Kiefel J observed that it was not obvious to her Honour why the ACCC sought the material to which the liquidator of Dataline would be entitled at the conclusion of the proceedings. In the result, Kiefel J refused to make the orders sought by the ACCC. 16 The Federal Court continues to retain the disk drives referred to in the anton pillar orders which are the property of Dataline and ought, upon conclusion of the proceedings, be returned to Dataline's liquidator. Accordingly, in order to resolve the transfer of that material, it is necessary to reinstate the company. 17 The applicant further says that reinstatement is just as the ACCC sought to secure the consent of Dataline's former liquidator to administrative reinstatement of Dataline by ASIC pursuant to s 601AH(1) and Dataline's former liquidator refused to do so. 18 I am satisfied that the ACCC has standing as a person aggrieved to bring the application and that it is just to exercise the power to reinstate Dataline. Accordingly, I propose to make the orders reflected in paragraphs 1 and 2 of the application by the ACCC filed on 27 April 2007. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.