Australian Competition and Consumer Commission v Australian Securities and... [2015] NSWSC 1999 | Case summary

Australian Competition and Consumer Commission v Australian Securities and... [2015] NSWSC 1999 | Case summary | Zoe

By Originating Process filed on 6 August 2015, the Applicant, Ms Amanda Ledermann, applies under s 601AH(2) of the Corporations Act 2001 (Cth) for an order that the Australian Securities and Investments Commission ("ASIC") reinstate the registration of MC Insulation Pty Ltd (In liquidation) ("Company"). By a further order made today, Mr Anthony Warner, who was formerly one of the two persons appointed as liquidator of the company prior to its deregistration, has been joined, with his consent, as a Second Applicant in the application. Mr Warner has indicated that he consents to being appointed as liquidator, if the Company is reinstated.
The application is supported by an affidavit of Ms Ledermann dated 3 August 2015. Ms Ledermann indicates that she was a shareholder in the Company prior to its liquidation, and the Company conducted an insulation business from its incorporation in December 2007 until it was placed in liquidation in December 2011. She refers to Mr Warner having been appointed, with Mr Kugel, as liquidators of the Company. She notes that the Company was deregistered by ASIC on 1 May 2013 under s 509 of the Corporations Act, which provides for deregistration of a company after a final meeting, when the company's affairs are fully wound up. Ms Ledermann also refers to her husband's role with the company, and the fact that he had been made bankrupt by reason of a personal guarantee to one of the creditors of the Company. Ms Ledermann notes that the Company experienced severe financial difficulties when the then Federal Government disbanded the Home Insulation Scheme in February 2010, and she notes that the current Federal Government has instituted a Home Insulation Programme Industry Payment Scheme to provide financial recompense to businesses which were adversely affected as a result of the Home Insulation Scheme. Ms Ledermann annexes a printout from the Department of Industry and Science website relating to the scheme, although that printout is not sufficiently detailed to provide a clear understanding of the terms of such compensation, or the basis on which it will be calculated. By an application made on 20 June 2015, Mr Ledermann had lodged an application for compensation under that scheme, and Ms Ledermann refers to advice received from the Department of Industry and Science that the application will be held open until 30 September to allow the Company to be reinstated.
Ms Ledermann made the application in her capacity as a contributory of the Company. She identified the basis on which she contended she was aggrieved by the deregistration, by reference to its effect upon her and her husband's financial affairs. The adverse impact of the deregistration upon Ms Ledermann might be put more precisely, so far as the deregistration of the Company would prevent it lodging a claim under the compensation scheme, for the benefit of its creditors or contributories. Plainly, Ms Ledermann would only benefit financially from such a claim, if the amount of compensation paid was sufficient to discharge the claims of creditors, leaving a surplus for contributories. However, it might be recognised that Ms Ledermann may also have an entirely proper interest in discharging the claims of creditors, albeit that she might not benefit financially from that course.
By a further affidavit sworn 27 August 2015, Mr Warner indicates that he had been appointed as liquidator of the Company, together with Mr Kugel who has since ceased to practice. He expresses the view, not surprisingly, that he considers that it will be in the interests of the Company's creditors, and the owners of the Company as at the date of its deregistration, that the Company be reinstated. That proposition seems to me to be plainly correct, where reinstatement of the Company would permit it to bring a claim for compensation, which may have some prospect of success which might otherwise not be available to it. Mr Warner confirms his willingness to be joined in the application as an applicant, as has now occurred, and he indicates that he has executed a further consent to act as official liquidator.
There is also evidence of service of the application on ASIC by letter dated 12 August 2015. Ms Ledermann's solicitor indicates that he has since been advised by ASIC, in a telephone conversation following an inquiry that he made, that ASIC will not provide a written response but will leave it to the Court to make a decision on the application. In those circumstances, it seems to me that Ms Ledermann has done all that she can properly do to bring the matter to ASIC's attention and allow it an opportunity to be heard.
Section 601AH(2) of the Corporations Act 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 the reregistration, or a former liquidator of the company, 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, where the company was in liquidation, a further liquidator will need to be appointed. I will return to that question below. The first element of an application under the section is that the applicant is a person aggrieved, and the second is that the Court is satisfied that it is just that the company's registration be reinstated.
It seems to me that it is arguable that Ms Ledermann is, herself, a person aggrieved by the deregistration, to the extent that it would deprive the Company, of which she is a contributory, of its ability to make a claim under the compensation scheme. It is arguable that Ms Ledermann is aggrieved by that matter, even if she would not financially benefit from such a claim, if she considers that it would be a proper matter for the Company to seek compensation for the benefit of its creditors, even if she would not financially benefit from that result. In any event, it is not necessary to reach a final determination about that matter because Ms Ledermann has prudently enlisted the former liquidator as a further applicant, and it is plain that the former liquidator has a standing to bring the application under s 601AH(2) of the Act. I am therefore satisfied that the application is properly brought, by a person who has standing to bring it.
The next question is whether it is just that the Company be reinstated. Relevant matters include 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]; Wedgwood Hallam Pty Ltd v Australian Securities and Investments Commission Re Combined Building Consultants Pty Ltd [2011] FCA 439 at [5]. In this case, it seems to me that it is plainly just and equitable that the Company be reinstated, so far as it will allow it an opportunity to pursue a claim for compensation as to which it would otherwise be unable to bring, where that claim of compensation may benefit its creditors and, potentially, its contributories. To put it another way, it would be an unjust result if, by reason of the Company's deregistration, it were shut out of pursuing a claim for compensation to which it would otherwise be properly entitled.
The remaining question, which causes little difficulty in this matter, is the effect of reinstatement, so far as a liquidator of the Company was formally in office. The balance of authority supports the view that the reinstatement of a company does not automatically result in the reappointment of a liquidator who was in office at the time of the company's deregistration, but the Court may appoint a liquidator with effect from the company's reinstatement: see, for example, JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu [2008] FCA 433; (2008) 65 ACSR 636 at [6]-[7] and the other cases cited in Austin & Black's Annotations to the Corporations Act [5A.601AH]. The case law has recognised that, all things being equal, it will generally be preferable that the liquidator who was in office at the time of the deregistration be reappointed. In this case, that is not practicable or desirable so far as Mr Kugel is concerned, where he has ceased to practice, but it is practicable and desirable to appoint Mr Warner, one of the Company's former liquidators, as liquidator from the point of the Company's reinstatement. Mr Warner will, of course, have the advantage of some knowledge of the Company's affairs, and have knowledge of its creditors, which is likely to be a matter relevant to any claim for compensation.
In these circumstances, I am satisfied that the orders sought by the applicants should be made. Accordingly, I make the following orders:
Order pursuant to section 601AH(2) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission reinstate the registration of the company MC Insulation Pty Limited (in liquidation) (ACN 129 012 362).
Order that Mr Anthony John Warner be appointed as liquidator of the company with effect from the reinstatement.

Australian Competition and Consumer Commission v Australian Securities and Investments Commission

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