Boardman (liquidator) v Australian Boutique Spirits Pty Ltd, in the matter of Europa International Pty Ltd

Federal Court of Australia|2021-12-17|Before: Cheeseman J

Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission (ASIC) forthwith reinstate the registration of Sona International Pty Ltd ACN 111 096 578.
Pursuant to s 601AH(2) of the Act that ASIC forthwith reinstate the registration of Sterling International Pty Limited ACN 061 030 215.
Pursuant to s 601AH(2) of the Act that ASIC forthwith reinstate the registration of company formerly known as Starr Enterprises Pty Ltd ACN 099 378 024 under the name ACN 099 378 024 Pty Ltd ACN 099 378 024.
There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

CHEESEMAN J: 1 By interlocutory application filed 1 December 2021 the applicants, Amit Raj Beri, Anil Beri, Meena Beri and Sahil Beri, seek orders pursuant to section 601AH(2) of the Corporations Act 2001 (Cth) that the respondent, Australian Securities and Investments Commission (ASIC), reinstate the registration of three deregistered companies, being Sona International Pty Ltd, Sterling International Pty Limited and Starr Enterprises Pty Ltd (together the deregistered companies). 2 The context in which the reinstatement orders are sought is the settlement of the substantive proceedings on terms that require the applicants to obtain the reinstatement of each of Sona, Sterling and Starr so that they can each confirm, when reinstated, that they will not seek to prove in the liquidation of Europa International Pty Ltd (in liquidation). ASIC, having been informed of the application on 1 December 2021 and following further communication with the applicants' solicitors on 14 December 2021, has indicated that it does not oppose the application subject to the strict understanding that no order as to costs is sought against it. ASIC did not seek to be heard on the application.

BACKGROUND 3 The applicants relied on two affidavits of Sahil Beri affirmed on 1 and 9 December 2021, two affidavits of Mr Buchanan, solicitor for the applicants, sworn on 9 and 13 December 2021, an affidavit of Anju Puri sworn 9 December 2021 and an affidavit of Anup Puri sworn 9 December 2021 as well as letters from ASIC to the applicants' solicitors dated 3 and 14 December 2021. 4 These proceedings were commenced by originating process filed on 27 September 2021. The plaintiff is John Richard Boardman in his capacity as the liquidator of Europa. 5 The primary relief sought by the liquidator in the substantive proceedings was an order pursuant to s 588FF(3)(b) of the Act extending the time for the liquidator to bring voidable transaction claims against the defendants. 6 The fourth to seventh defendants, who are the applicants on the present application, are members of the Beri family - Amit Raj Beri, Anil Beri, Meena Beri and Sahil Beri. Meena and Anil Beri are the parents of Amit and Sahil. The first to third defendants are related companies of the Beri family (the Beri Companies). 7 The background to the liquidation of Europa and the claims made by the liquidator against the Beris and the Beri Companies is set out in Boardman (liquidator) v Australian Boutique Spirits Pty Ltd, in the matter of Europa International Pty Ltd (in liq) [2021] FCA 1520 (Halley J). Familiarity with the background to these proceedings is assumed for the purpose of the reasons. 8 For the present purposes it suffices to note that the substantive proceedings were settled on 19 November 2021. The terms of the settlement are recorded in a confidential Deed of Settlement and Release. 9 The terms of the Deed were subject to and conditional upon court approval being obtained under ss 477(2A) and 477(2B) of the Act. The relevant Court approval was obtained on 1 December 2021: in the matter of Europa at [43] - [44].

The Deregistered Companies 10 Each of the deregistered companies had lodged a proof of debt in the liquidation of Europa: Sterling ($132,760.84), Sona ($170,000) and Starr ($90,000). The liquidator had made demands on two of the deregistered companies: Sterling ($412,000) and Sona ($209,100). The deregistered companies were deregistered prior to commencement of the substantive proceedings by the liquidator and the liquidator had not made any application to reinstate the deregistered companies. Sona and Sterling were the subject of ASIC initiated deregistrations under s 601AB of the Act, either because Sona and Sterling had not paid an annual review fee, or had not lodged any documents in the period 18 months prior to deregistration or ASIC had no reason to believe the companies were conducting any business. Starr was deregistered following a voluntary deregistration application under s 601AA of the Act filed on 22 June 2016. 11 Prior to Sterling's deregistration, the directors of Sterling were Anil Beri, Sahil Beri and Meena Beri (who was also secretary) and the shareholders were Anil Beri (75%) and Sahil Beri (25%). Prior to Sona's deregistration, Meena Beri was the sole director, shareholder and secretary of Sona. Prior to Starr's deregistration, its directors and shareholders were Anil Beri, Anup Puri and Anju Puri (who was also secretary). The Puris each held 34 ordinary shares and Anil Beri held 30 shares from a total issued of 98 shares. 12 The Puris are not parties to the substantive proceedings or to the Deed and are not parties to the present application. The applicants have filed evidence from Anup Puri and Anju Puri setting out their understanding of the consequences of reinstatement and their awareness that if the deregistered companies were to be reinstated, their roles and responsibilities as officeholders would resume. If the reinstatement application is successful Anup Puri and Anuj Puri have provided undertakings that they will ensure relevant notifications are made to ASIC updating the ASIC register as to changes to any officeholders and will attend to payment of outstanding fees and penalties and any outstanding judgments against the companies of which they are officeholders. A similar undertaking has been provided by Sahil Beri in his affidavit of 9 December 2021. 13 Section 601AH relevantly provides: Reinstatement by Court (2) The Court may make an order that ASIC reinstate the registration of a company if: (a) an application for reinstatement is made to the Court by: (i) a person aggrieved by the deregistration; or (ii) a former liquidator of the company; and (b) the Court is satisfied that it is just that the company's registration be reinstated. (3) If the Court makes an order under subsection (2), it may: (a) validate anything done between the deregistration of the company and its reinstatement; and (b) make any other order it considers appropriate. … Effect of reinstatement (5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim. 14 The relevant principles were discussed in Yeo v Australian Securities and Investments Commission, in the matter of Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480 at [10] - [25] (Gleeson J) and Hogan (Liquidator) v Australian Securities and Investments Commission, in the matter of NetiveEdu Pty Ltd (Deregistered) [2021] FCA 730 at [30] - [33]. It is not necessary to repeat the principles save that in the present context I would add that there is no temporal restriction in the expression "person aggrieved". What is required is that there be a causal link between the grievance and the deregistration. A person may therefore become aggrieved post deregistration: Lee v Parker [2020] FCA 1453 at [12(g)] (Griffiths J).

Are the applicants persons aggrieved 15 Whether an applicant for reinstatement is a "person aggrieved by the deregistration" is a low threshold and should not be narrowly construed: Brereton v Australian Securities and Investment Commission [2007] FCA 651 at [2] (Finkelstein J); see also Yeo at [16] and cases cited therein. The applicant must have a genuine grievance that the dissolution of the company has affected his or her interests. That the applicants' grievance has arisen well after the deregistrations does not matter if the requisite causal link is established. 16 In the present case, the applicants are persons "aggrieved" by the deregistration of Sterling, Sona and Starr because as part of the settlement of the potential claims the liquidator had made against each of them they assumed an obligation to obtain the reinstatement of Sterling, Sona and Starr so that those entities can confirm in writing to the liquidator, once reinstated, that they will not seek to prove in the winding up of Europa. The applicants will be aggrieved by the relevant deregistations if they do not cause the deregistered companies to be reinstated within the time frame contemplated by the Deed because that would result in them being in breach of the Deed. 17 I am satisfied that each of the applicants has established that they are relevantly a "person aggrieved by the deregistration" under s 601AH(2)(a)(i) of the Act.

Is it just to reinstate the deregistered companies? 18 I am satisfied that the purpose of the reinstatement is to permit the applicants to comply with their obligations under the Deed. As noted above, the condition precedent requiring Court approval under ss 477(2A) and 477(2B) has been satisfied: see in the matter of Europa. 19 Each of the shareholders and directors of Sterling, Sona and Starr consent to and are supportive of the reinstatement. None of Sterling, Sona or Starr were deregistered because they were insolvent - Sterling and Sona were deregistered pursuant to s 601AB of the Act and Starr was voluntarily deregistered pursuant to s 601AA of the Act. 20 The directors and shareholders of Sterling, Sona and Starr have confirmed they were familiar with the books and records of each company before it was deregistered and that none of the entities will be insolvent if they are reinstated by ASIC. 21 There is nothing to suggest that any person would be prejudiced by the reinstatement of Sterling, Sona and Starr. Sahil Beri and the Puris have deposed that they are not aware of any party that would be adversely affected by the reinstatement of the deregistered companies and that, to the best of their knowledge, there are no outstanding judgments against any of the deregistered companies or any officer of any of the deregistered companies. Rather the applicants would be prejudiced by the deregistered companies not being reinstated because they would not be able to comply with their obligations under the Deed. 22 I am also satisfied that it is appropriate to make an order reinstating the deregistered companies in circumstances where ASIC has confirmed that it does not oppose the application. 23 As a matter of completeness, I note that ASIC has confirmed that the name formerly used by Starr is not available and accordingly, Starr will be reinstated using the name suggested by ASIC which uses its ACN as its name.

Residual discretion 24 I see no reason to decline the reinstatement as an exercise of residual discretion.

Conclusion 25 Accordingly, I will make orders substantially in the form sought by the applicants. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

SCHEDULE OF PARTIES NSD 1001 of 2021

Defendants: Second Defendant: ALEMNESCH PTY LTD ACN 119 963 861 Third Defendant: EMPIRE AUSTRALIA PTY LTD ACN 068 593 395 Fourth Defendant: MR AMIT RAJ BERI Fifth Defendant: MR ANIL BERI Sixth Defendant: MRS MEENA BERI Seventh Defendant: MR SAHIL BERI

Applicants: Second Applicant: MR ANIL BERI Third Applicant: MRS MEENA BERI Fourth Applicant: MR SAHIL BERI

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