By Originating Process filed on 25 July 2018, the Plaintiff, Ms Susanne Gervay, applies for orders under s 601AH(2) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission ("ASIC") reinstate the registration of two companies, Gervay Holdings Pty Limited ("Holdings") and Gervay Private Hotel Pty Limited ("Private"), and make orders that one of the former liquidators of the two companies, Mr Mark Hutchins, be restored to office as liquidator upon reinstatement of the companies' registration, and validating, to the extent that may be necessary, any steps taken by the former liquidators after the companies' deregistration and before their reinstatement as if the deregistration had never occurred.
Australian Competition and Consumer Commission v Australian Securities and... [2018] NSWSC 1487 | Case summary | Zoe
Mr Hutchins has been joined as a Defendant in the application and has consented to his appointment as liquidator if the companies are reinstated, and indicates that he would also bring the applications for reinstatement, to the extent that any question may arise as to Ms Gervay's standing to do so. Notice has been given of the application to ASIC, which has indicated that it does not oppose the application for reinstatement of the two companies subject to its usual conditions in respect of such an application.
The application is supported, first, by an affidavit of Ms Gervay dated 25 May 2018, which sets out the history of the matters leading to this application. Ms Gervay is a director of a third company, Gervay Super Fund Pty Limited ("Gervay Super"), which is the trustee of a self-managed superannuation fund, the Hughenden Superannuation Fund ("Fund"). The Fund was originally established in 1996 and Private was originally its trustee. In 2007, the Fund, or more precisely its then trustee, Private, acquired a property situated at Woollahra in New South Wales and appointed Holdings as nominee to enter into the contract for the purchase of the property and to hold that property. There is evidence that the funds provided to purchase the property were provided from the Fund. Private retired as trustee to the Fund in 2009 and Gervay Super was then appointed to become the new trustee. Ms Gervay points out that, upon the retirement of Private and the appointment of Gervay Super, the trust property vested in Gervay Super as the new trustee under the Trustee Act 1925 (NSW). Private was not then carrying on any activities or acting as trustee and, in 2014, it was deregistered. Holdings was also deregistered at the same time, after instructions were given, but apparently not implemented, for the transfer of the Woollahra property then held by Holdings as nominee for Private to Gervay Super. The result of the deregistration of Holdings and Private is that the Woollahra property has vested in ASIC, on deregistration of the companies, although ASIC only takes such property rights as Holdings itself had and, to the extent that the Woollahra property was subject to other interests or claims, including the claims arising from the trust, ASIC takes the property subject to that interest or claim.
In the event, not surprisingly, Ms Gervay and Gervay Super wish the Woollahra property to be transferred to Gervay Super. It appears that that transfer would give rise to significant stamp duty liability. Ms Gervay and Gervay Super anticipate that stamp duty arising from the transfer of that property will be reduced if the companies are reinstated. There would be nothing illegitimate about that result, which would reflect the position that would have existed had a transfer taken place prior to the deregistration of the companies.
Ms Gervay also relies on an affidavit of Mr Hutchins dated 28 June 2018, which refers to steps taken when the companies were in liquidation to identify creditors of the companies and to his having found that the companies did not have relevant creditors at that time. He also refers to steps which were taken at that time to deal with the companies' property, but not including the Woollahra property, which it was then understood was held on trust. He also refers to steps which have been taken to deal with the position if he is reappointed as liquidator of the companies, and which would be taken to bring about a transfer of the Woollahra property from Holdings to Private, if the companies are reinstated, then from Private to Gervay Super, and then to bring about a deregistration of the companies once those transfers have occurred.
I also had the benefit of submissions from Mr Klooster, who appears for Ms Gervay, and who sets out the factual history to which I have referred above, based on the affidavit evidence. Mr Klooster identifies the matters that are relevant to an application for reinstatement, which include the circumstances of the deregistration of the relevant company, the use to which it would be put upon reinstatement, any likely prejudice to third parties and whether there is any public interest reason not to order reinstatement: Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316. In this case, the circumstances of deregistration of the companies involve, at least, a misunderstanding as to what was to be done with the Woollahra property then held by Holdings; there is plainly a good use to be put to the companies upon reinstatement, that is to bring about the transfer of the property to Gervay Super as the present trustee of the Fund; there is no identified or identifiable prejudice to third parties arising from the reinstatement; and there is no public interest reason not to order reinstatement, where the intent of the reinstatement is to bring about the stamp duty position which would have existed had the transaction been implemented as was originally intended.
Mr Klooster identifies a question as to whether Ms Gervay has standing as a person aggrieved by the deregistration of the companies. I am inclined to think that she does have such standing, where it appears that she is the beneficiary of the Fund, and its trustee is presently out of possession of the Woollahra property which is its entitlement, a matter which would plainly adversely impact upon Ms Gervay's economic interests. It is, however, not necessary to express any final view as to that matter, because Mr Hutchins properly indicates that he would bring the reinstatement application, if Ms Gervay did not have standing to do so, and it is plain that he would have standing to bring that application. It is not necessary, in that situation, to take the merely formal step of adding Mr Hutchins as plaintiff in the proceeding.
Mr Klooster submits, and I accept, that it is just that the companies be reinstated, where that will allow Holdings to transfer the property to Private, which can then transfer it to Gervay Super, the current trustee of the Fund. As I have noted above, that would give effect to the current trustee's entitlement to the Woollahra property, and the fact that it may do so without exposing the trustee or the companies to additional stamp duty, which would otherwise not have arisen, is not a reason for criticism. Mr Klooster rightly recognises that, where the companies were in liquidation prior to deregistration, they will be reinstated in liquidation. Mr Hutchins consents to reappointment as liquidator, where the previous joint liquidator has retired from the relevant firm. The Court would ordinarily appoint a former liquidator upon reinstating a company, if he or she consents to that appointment, and there is no reason not to do so in this case. As I have noted above, ASIC has been given notice of the application and does not oppose it.
In these circumstances, I make orders to the effect set out in the Originating Process filed on 25 July 2018, excluding paragraph 7. I direct that the Plaintiff provide a form of short minutes of order to my Associate, by 4pm on 14 August 2018, or earlier if the orders are sought to be made prior to that time. Mr Hutchins has sought an order that Ms Gervay pay his costs of the application, although that matter already appears to be addressed by undertakings and arrangements between the parties. Mr Klooster did not seek to be heard in opposition to that order. Accordingly, I make an additional order that the Plaintiff pay Mr Hutchins' costs of this application, as agreed or as assessed. I also order that the exhibit be returned.
[3]
Amendments
02 November 2018 - Correction of typographical error to para 6 and cover page.
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Decision last updated: 02 November 2018