Baird v W J T Howes Investments Pty Ltd [2008] NSWSC 1232 | Case summary

5077/08 RONALD BAIRD v W J T HOWES INVESTMENTS PTY LIMITED JUDGMENT 1 The plaintiff has sued (or purported to sue) W J T Howes Investments Pty Ltd ("Howes") in the Dust Diseases Tribunal of New South Wales. He claims that, in the course of his employment by Howes between about 1957 and 1983, he was exposed to asbestos dust and fibre as a consequence of which he contracted a lung disease and thereby suffered pain, injury, loss and damage. 2 Howes, however, no longer exists. The plaintiff wishes to have it brought back into existence. It is for that reason that he initiated the present proceedings by originating process filed on 7 October 2008. 3 Search materials in evidence show that Howes was incorporated on 25 June 1965 under the Companies Act 1961 (NSW) and that it was "deregistered" on 9 July 1990, that is, at a time when the Companies (New South Wales) Code was the generally applicable companies legislation in this State. 4 The fact that Howes is recorded as having been "deregistered" rather than "dissolved" warrants an inference that its existence came to an end pursuant to s 459(4) of the Companies (New South Wales) Code, rather than s 382(6) or s 411(5). Section 459(4) is concerned with striking off of companies by the National Companies and Securities Commission and is headed "Power of Commission to deregister defunct company". Sections 382(6) and 411(5), by contrast, are concerned with dissolution upon completion of winding up. 5 A threshold question concerns the source of the court's jurisdiction to bring about the revival of a company which, because deregistered by the NCSC under s 459(4) of the Companies (New South Wales) Code, goes out of existence by force of that section. 6 In both Shaw v Goodsmith Industries Pty Ltd [2002] NSWSC 406; (2002) 41 ACSR 556 (6 May 2002) and Parker v Australian Asbestos Pty Ltd [2002] NSWSC 520; (2002) 42 ACSR 138 (11 June 2002), it was held that, having regard to transitional provisions, the court's jurisdiction under s 601AH of the Corporations Act 2001 (Cth) extended to the making of an order directing reinstatement of the registration of a company deregistered before the commencement of the Corporations Law on 1 January 1991. 7 In City West Water Ltd v Mr D Investments Pty Ltd [2002] VSC 553; (2002) 171 FLR 392 (17 December 2002), however, it was held that the matter of reinstatement of the registration of a company that had existed under and been deregistered pursuant to the Companies (Victoria) Code was a matter that remained subject exclusively to the continuing provisions of that Code; and that this was so notwithstanding provisions concerning transition from that Code to the Corporations Law of Victoria and subsequent transition to the Corporations Act 2001 (Cth). 8 I am satisfied that the reasoning and conclusions of Senior Master Mahony in the City West Water Ltd case are correct and must prevail to the exclusion of my own decision, in this respect, in Shaw v Goodsmith Industries Pty Ltd and also, to the extent of inconsistency, that of Austin J in Parker v Australian Asbestos Pty Ltd. Particularly compelling is the observation made at paragraph [27] of the judgment in City West Water Ltd. 9 The analysis made by Senior Master Mahony is consistent with that of McLelland J in National Australia Bank Ltd v Australian Securities Commission (1991) 5 ACSR 453 (followed by Santow J in Re K P Wee Investments Pty Ltd (1993) 32 NSWLR 745 and by Commissioner Heenan in Re Porter (1994) 15 ACSR 424). The court was not referred to these cases in Shaw v Goodsmith Industries Pty Ltd or, it appears, in Parker v Australian Asbestos Pty Ltd. 10 In Lunn v Cardiff Coal Company (No 3) [2003] NSWSC 789; (2003) 177 FLR 411 at [41], I acknowledged that, as both McLelland J and Senior Master Mahoney had held, deregistration of a company pursuant to the Companies (Victoria) Code before January 1991 was a "matter arising before" that date for the purposes of s 85 of the Corporations (Victoria) Act 1990 (Vic). The same conclusion holds good under s 85 of the Corporations (New South Wales) Act 1990 (NSW) in relation to the deregistration with which I am here concerned. 11 By virtue of s 85 of the Corporations (New South Wales) Act 1990 (NSW), the Companies (New South Wales) Code continues to apply of its own force in relation to matters arising before 1 January 1991 insofar as those matters are not dealt with by the Corporations Law of New South Wales or the Corporations Act 2001 (Cth). The deregistration of Howes is such a matter. 12 Section 459(6) of the Companies (New South Wales) Code is in these terms: "If a person is aggrieved by the cancellation of the registration of a company, the Court, on an application made by the person at any time within 15 years after the cancellation, may, if satisfied that the company was, at the time of the cancellation, carrying on business or in operation or otherwise satisfied that it is just that the registration of the company be reinstated, order the reinstatement of the registration of the company and, upon an office copy of the order being lodged with the Commission, the company shall be deemed to have continued in existence as if its registration had not been cancelled, and the Court may by the order give such directions and make such provisions (including directions and provisions relating to the re-transfer of property vested in the Commission under section 461) as seem just for placing the company and all other persons in the same position as nearly as may be as if the registration of the company had not been cancelled." 13 In this section, the reference to the "Court" is, by virtue of s 9 of the Companies and Securities (Interpretation and Miscellaneous Provisions) (New South Wales) Code, a reference to the Supreme Court of New South Wales; and the reference to the "Commission" is, having regard to s 60(1) and s 66 of the Corporations (New South Wales) Act 1990 (NSW), now a reference to Australian Securities and Investments Commission. 14 In the present case, the plaintiff's application was made more than eighteen years after the deregistration of Howes. Even if it is shown that the plaintiff is a person "aggrieved by the cancellation of the registration" of Howes and that it is "just" that the registration be reinstated, the application is one that the court cannot grant unless, first, there is a power to extend the fifteen-year limitation period referred to in s 459(6) and, second, that power is exercised favourably to the plaintiff. 15 Mr Cheshire of counsel submitted on behalf of the plaintiff that the court has power to grant an extension of time under s 539(4)(d) of the Companies (New South Wales) Code: "Subject to the following provisions of this section and without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes: … (d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned expired before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding, and may make such consequential or ancillary orders as the Court thinks fit." 16 This must be read subject to s 539(6)(c): "The Court shall not make an order under this section unless it is satisfied - … (c) in every case-that no substantial injustice has been or is likely to be caused to any person." 17 The availability of s 366(4) of the Companies Act 1961 (NSW) - a provision equivalent to s 539(4)(d) of the Companies (New South Wales) Code - as a means of extending the period specified in a reinstatement provision corresponding with s 459(6) was recognised by Street J in Re Suntown Pty Ltd (1970) 92 WN (NSW) 943. The application in that case was an application under the equivalent of s 458 of the Code enabling the court to declare void a dissolution that had occurred at the conclusion of winding up. His Honour nevertheless made, for comparative purposes, observations about s 308(5) of the Companies Act 1961 (NSW) (the equivalent of the Code's s 459(6)) (at 945): "As an illustrative contrast s 308(5) confers upon the Court jurisdiction to restore the name of a company to the register. The time limitation in this regard is couched in the terms, '… the Court on an application made by the person at any time within fifteen years after the name of the company has been struck off …'. This time limitation in s 308(5) can be seen at once to fall within the scope of s 366(4), in that it is a time limited by the Act 'for doing any act or taking any proceeding'. The making of an application is aptly encompassed within the doing of an act or taking a proceeding. . . ." 18 This, to my mind, provides a firm foundation for a conclusion that the court may grant an application made under s 459(6) of the Companies (New South Wales) Code after the expiration of the fifteen-year period if it also sees fit to make an order for extension of time under s 539(4)(d) of that Code. 19 Having reached that point, I should refer to the circumstances of this case. The plaintiff, as I have said, alleges that he contracted an asbestos-induced disease in the course of his employment by Howes. There is evidence that an insurer of the defendant was "on risk" for the year in which cessation of employment occurred. It may well be that insurance subsisted for earlier periods as well, but there is no evidence of this. At the time of deregistration, Howes had two directors. One has since died. 20 In a similar but separate case brought before the court by Mr Cheshire at the same time as the present application, I had occasion to consider the circumstances in which a person in a position such as that occupied by the present plaintiff might proceed direct against the insurer of a deregistered and non-existent company without revival of the company: see Stone v ACN 000 337 940 Pty Ltd [2008] NSWSC 1058; (2008) 68 ACSR 242. That possibility does not exist in the present case. The right of direct action is conferred by s 601AG of the Corporations Act 2001 (Cth) which refers to "the insurer of a company that is deregistered". But Howes, created by the Companies Act 1961 (NSW) and dissolved by the Companies (New South Wales) Code, was never a "company" as defined by s 9 of the present Corporations Act. Nor will it become such a "company" if its registration is reinstated. 21 The Companies (New South Wales) Code contains no counterpart of the present s 601AG which was introduced by the Company Law Review Act 1998 (Cth). Any prospect that the plaintiff might have of recovery against an insurer of Howes is therefore dependent on Howes becoming a party to litigation. 22 The circumstances to which I have referred are sufficient to cause the plaintiff to be, in terms of s 459(6) of the Companies (New South Wales) Code, a person "aggrieved" by the cancellation of the registration of Howes. That cancellation and the dissolution and extinction resulting from it have left the plaintiff in a position where he is deprived of an opportunity to seek to make good a claim to which insurance might well respond. The same considerations make it "just" that the registration be reinstated, provided that it is clear that the company will be under suitable administration if revived. While there are instances in which restoration has been ordered without any expectation of effective governance (see, for example, Venn v Direct Line Freight Pty Ltd (1983) 1 ACLC 998), that is generally something that the court will seek to avoid. Subject to this proviso about governance and to the question of extension of time, the plaintiff has made out his claim for an order under s 459(6). 23 It is relevant to note, in relation to suitable administration and governance, that the plaintiff seeks an order that, upon being restored to the register, Howes be wound up. That is a step often taken when similar applications under s 601AH of the Corporations Act come before the court. Shaw v Goodsmith Industries Pty Ltd (above) is an example of such a case. 24 I have not been referred to any like case under the Companies (New South Wales) Code or corresponding legislation stemming from the Companies Act 1981 (Cth). And I note that in Re Formcrete Services Pty Ltd (1976) 2 ACLR 46, Needham J refused to make a winding up order when making a restoration order under the 1961 predecessor to the Code's s 459(6). In Re Williams United Mines Pty Ltd (1992) 8 ACSR 627, however, McLelland J took a different view in relation to a provision of the Corporations Law corresponding with the provision that had been considered by Needham J. McLelland J, following Re Cambridge Coffee Room Association Ltd [1952] 1 All ER 112, held that it was appropriate to make a reinstatement order and a winding up order. The statutory provision before McLelland J was in the same form as s 459(6) of the Companies (New South Wales) Code. The same procedure is therefore available. 25 Given that Howes has been without officers and administrative framework for eighteen years and noting that there is only one director living, it is in my view just and equitable that, if revived, the company should be subject to winding up. The plaintiff, as a tort claimant, has standing to seek winding up. 26 I return to the question of an extension of the fifteen-year period specified in s 459(6) of the Companies (New South Wales) Code. The sole remaining director of Howes has stated to the plaintiff's solicitor that she does not oppose the reinstatement of Howes' registration provided that the company confines itself to the role envisaged for it in the Dust Diseases Tribunal proceedings. As a practical matter, that is likely to be the outcome. On that basis, I do not consider that that person is likely to suffer injustice if the period is extended so as to allow Howes to be revived. There is certainly no injustice to the plaintiff. Nor is it possible to see that injustice is likely to be visited upon anyone else. 27 Given that a positive case for restoration to the register has been made out (provided that winding up is imposed) and that no injustice is in prospect, it is appropriate that time be extended. 28 Returning to the winding up aspect, there is a matter concerning choice of liquidator that needs to be considered. It was referred to in Lunn v Cardiff Coal Company (No 3) (above) at [66]. In summary, the court's power, when making a winding up order under the Companies (New South Wales) Code, is a power to appoint as liquidator an "official liquidator" as defined by that Code. In addition, it is provided by s 417(1) of the Code that a person shall not act as liquidator of a "company", as defined by the Code, unless the person is a "registered liquidator" (defined by s 5(1) by reference to registration under certain subsections of s 20 of the Code) or holds a registration in relation to the particular company under s 20(3) of the Code. 29 Upon reinstatement of its registration, Howes will again be a "company" as defined by the Companies (New South Wales) Code - but, as I have said, not as defined by the Corporations Act. It needs to be shown that the person whose consent to act as liquidator has been produced is qualified in the way just mentioned. Otherwise, it will be necessary to obtain a consent from someone who is so qualified. 30 Leave to proceed with the proceedings in the Dust Diseases Tribunal against the company in liquidation should be granted subject to the usual condition that no step will be taken to enforce any judgment (otherwise than by resort to insurance) without the further leave of the court. 31 ASIC was notified of this application. It has indicated that it offers no opposition, provided certain conditions are satisfied. One concerns the form of the order for reinstatement: "The orders sought for reinstatement are sought under the appropriate form requiring ASIC to reinstate the registration of the company" [original emphasis] 32 That form of order is appropriate in cases arising under s 601AH of the Corporations Act 2001 (Cth). The section refers expressly to "an order that ASIC reinstate the registration of a company". In s 459(6) of the Companies (New South Wales) Code, however, it is said merely that the court may "order the reinstatement of the registration of the company". The section goes on to specify the consequences of the lodgment with "the Commission" of an office copy of the order. The approach thus seems to be that the order is not directed as a command to anyone but, once it has been made and an office copy has been lodged, a statutory consequence follows. It therefore seems appropriate that the form of order be as suggested by the report of Re Great Southern Land Investment Co Ltd [1910] VLR 150 at 153 so that it is merely an order at large for reinstatement. 33 Subject to the matter concerning qualification of the liquidator, it will be appropriate to make orders as follows: 1. Order pursuant to s 539(4)(d) of the Companies (New South Wales) Code that the period for the making by the plaintiff of the application under s 459(6) of the Code advanced by his originating process filed on 7 October 2008 be extended nunc pro tunc so as to expire upon the filing of that originating process. 2. Order pursuant to s 459(6) of the Companies (New South Wales) Code that the registration of W J T Howes Investments Pty Limited (a company registered on 25 July 1965 and deregistered on 9 July 1990) be reinstated. 3. Order that, forthwith upon reinstatement of its registration, W J T Howes Investments Pty Limited be wound up under the Companies (New South Wales) Code . 4. Order that, forthwith upon reinstatement of the registration, [name] of [address] be appointed liquidator of W J T Howes Investments Pty Ltd. 5. Order pursuant to s 371(2) of the Companies (New South Wales) Code that Ronald Baird have leave nunc pro tunc to commence and leave to proceed with Case No 8168/08 against W J T Howes Investments Pty Ltd in the Dust Diseases Tribunal of New South Wales. 6. Order that Ronald Baird take no step to enforce any judgment or award obtained by him against W J T Howes Investments Pty Limited in Case No 8168/08 in the Dust Diseases Tribunal of New South Wales (otherwise than by resort to proceeds of insurance) without the further leave of this court.

Baird v W J T Howes Investments Pty Ltd

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