Baird v WJT Howes Investments Pty Ltd [2009] NSWSC 343 | Case summary

6339/08 AMALEX PTY LTD; APPLICATION OF SUZANNE MAVIS SHAW & ANOR JUDGMENT 1 This is an application for an order that the registration of Amalex Pty Ltd be reinstated. 2 Amalex was incorporated on 29 June 1970 under the Companies Act 1961. It was deregistered on 16 April 1982 because of failure to lodge an annual return. Deregistration thus occurred under s 459(4) of the Companies (New South Wales) Code. 3 The shareholders of Amalex at the time of its deregistration were Alexander Elliott Shaw and Mavis Ruby Shaw. Each held one share. They were also the directors. M R Shaw died on 12 February 1986. A E Shaw died on 17 May 2008. 4 The present application is made by Suzanne Mavis Shaw and Gregory John Shaw, the two children of A E Shaw and M R Shaw. S M Shaw and G J Shaw are the executors of the will of A E Shaw. Probate was granted to them on 3 September 2008. They are also the residuary beneficiaries in equal shares. The fact of Amalex's deregistration came to light upon investigations being made by the solicitor acting in connection with the estate of A E Shaw. 5 Amalex continues to be registered as the proprietor under the Real Property Act 1900 of a residential property at Glebe. It appears that, at the time of Amalex's deregistration, Amalex's title to the property was unencumbered. S M Shaw deposes that outgoings in respect of the property continued to be paid after deregistration of the company. I infer from her statement that A E Shaw was in 1982 the company's accountant and from the fact that the company was obviously a family company that it was A E Shaw who kept up the payments. 6 For reasons discussed in Baird v WJT Howes Investments Pty Ltd [2008] NSWSC 1232; (2008) 222 FLR 76 which need not be repeated, I am of the opinion that the power to bring about the revival of a company incorporated under the Companies Act 1961 and deregistered under s 459(4) of the Companies (New South Wales) Code comes from s 459(6) of that Code and that power is exercisable by this court. Section 459(6) 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." 7 In this case, as in Baird v WJT Howes Investments Pty Ltd, the application for an order for reinstatement is made well after the expiration of the period of fifteen years referred to in s 459(6). In Baird's case, the deregistration had occurred more than 18 years before the reinstatement application was made. In this case, the period is almost 27 years. 8 There is power under s 539(4)(d) of the Companies (New South Wales) Code to extend the 15 year limitation period prescribed by s 459(6). Again, the basis for this conclusion is stated in Baird v WJT Howes Investments Pty Ltd (see paragraphs [17] and [18]) and need not be repeated. Section 539(4)(d) is as follows: "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." 9 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." 10 I have referred to the fact that S M Shaw and G J Shaw are the executors and residuary beneficiaries of the estate of A E Shaw and that one of the two shares in Amalex was held by A E Shaw at the time of deregistration in 1982. I have also referred to the fact that the other share was held at that time by M R Shaw who died in 1986. It appears, however, that there was never any grant of representation in the estate of M R Shaw. It follows that, if the registration of Amalex is reinstated, S M Shaw and G J Shaw, by virtue of their established status in relation to the estate of A E Shaw, will occupy a position where they can exercise the powers attaching to the one share that will then be recorded in the name of A E Shaw. No similar position will arise, however, in relation to the share that will then be recorded in the name of M R Shaw. 11 In evidence is a will of M R Shaw dated 3 August 1964 which appoints A E Shaw as sole executor and gives the whole of the estate to him if he is living at the death of M R Shaw (as he was). If and when effect is given to those testamentary intentions, S M Shaw and G J Shaw will come to own the second share as well. 12 On the evidence before me, therefore, S M Shaw and G J Shaw (the present applicants) are the only persons having (or entitled to have) any interest in the reinstatement of the registration of Amalex. Their interest in the entire share capital has been mentioned. The fact that ownership of the Glebe property appears to have been the only activity the company undertook means that no one else appears to have an interest in the question of reinstatement. The fact that the property is unencumbered (and is referred to as having had a value of $520,000 at the death of A E Shaw) and that shares in Amalex, if existing, would therefore appear to have appreciable value means that S M Shaw and G J Shaw are, in terms of s 459(6), "aggrieved" by the cancellation of the registration of Amalex. 13 There is no basis for thinking that prejudice or injustice will be occasioned to any person if the limitation period in s 459(6) is extended to allow the present application to be brought. Nor is it possible to see that prejudice or injustice will be occasioned to any person if the existence of Amalex is revived, subject to the matter of proper stewardship. Indeed, it is, in terms of s 459(6) (and subject to the same qualification), "just" that the company's registration be reinstated. This is because the single asset of the company, which was unencumbered, ought in justice to be available for the benefit of the persons entitled to the shares in the company. 14 In relation to the matter of proper stewardship, it is submitted on behalf of the applicant that there should be a condition attached to the order for reinstatement making it conditional upon the grant of letters of administration with the will of M R Shaw annexed and transmission of the two shares in accordance with the wills of M R Shaw and A E Shaw so that they become registered in the names of S M Shaw and G J Shaw. 15 I am not persuaded that it is open to the court to make a conditional order under s 459(6) of the Companies (New South Wales) Code. That section operates of its own force to bring about deemed continuity of existence upon and by virtue of the lodgment of an office copy of the order with the Commission. There is no room, it seems to me, for any form of conditionality. 16 The preferable course is that the application for a grant of letters of administration with will of M R Shaw annexed be made first. If a grant is made to S M Shaw and G J Shaw, it will be clear to the court that those two persons between them are able to exercise all the powers of the members of the company and may therefore become appropriate recipients of directions of the kind s 459(6) contemplates. 17 At this stage, therefore, I shall stand over the application, with liberty to restore to the list before me, on the footing that I am satisfied that it will be appropriate to make an order extending time under s 539(4)(d) and an order of reinstatement under s 459(6) if and when S M Shaw and G J Shaw show that they have attained the status they intend seeking in relation to the estate of M R Shaw. **********

Baird v WJT Howes Investments Pty Ltd

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Judgment (11 paragraphs)

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