Brown v Hodgkinson

1 This application concerns Data Tech Communications (Aust) Pty Limited, which I shall call "Data Tech". The application is brought by Data Tech itself and by its sole director, Mr Chapman. 2 Data Tech was registered on 21 May 1993 under the Corporations Law of Queensland. On or about 16 May 2004, the Australian Securities and Investment Commission deregistered Data Tech apparently pursuant to s 601AB of the Corporations Act 2001 (Cth). Mr Chapman's affidavit says that this occurred because of non-payment of fees following notification by Data Tech's then accountants to ASIC of an incorrect address for communicating with Data Tech. 3 For present purposes, the precise reason for the deregistration in 2004 is unimportant. This is because Data Tech's registration was later reinstated. This happened on 11 February 2009. By letter of that date to Mr Chapman, ASIC said: "The above named company was reinstated to the register by the Australian Securities and Investments Commission on 11 February 2009. This means that the registration of the company continues as if deregistration had not occurred." 4 It may safely be inferred from this letter (and I find) that the reinstatement of the registration of Data Tech was effected under section 601AH(1) which is the only provision allowing reinstatement by ASIC of its own motion. That provision is in the following terms: "ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered." 5 By their originating process, Data Tech and Mr Chapman make claims as follows: "1. That the court makes an Order to validate the reinstatement of the First Plaintiff by ASIC on 19 February 2009 pursuant to s 601AH(1) of the Corporations Act 2001. 2. That the Court makes an order to reinstate the First Plaintiff pursuant to s 160AH(2) of the Corporations Act 2001, endorsing ASIC's reinstatement of the First Plaintiff on 19 February 2009. 3. That the Court make an order to validate anything done by the First Plaintiff and Second Plaintiff or any other Officer of the First Plaintiff between the deregistration of the First Plaintiff and its reinstatement." 6 Ms Gayle, who appeared for Data Tech and Mr Chapman on this application, made it clear by reference to relevant parts of Mr Chapman's affidavit that there is a desire to put beyond doubt the efficacy and validity of everything done by and in relation to Data Tech during the period of its temporary non-existence, that is, the non-existence created by s 601AD(1) on deregistration and brought to an end by the reinstatement affected by ASIC on 11 February 2009. 7 The evidence makes it clear that Mr Chapman was not aware of the deregistration and had carried on thereafter as if Data Tech still existed, causing it to conduct business or apparently to conduct business in the usual way. 8 In relation to paragraph 1 of the originating process, I was not referred to any statutory provision empowering the court to validate ASIC's action of 11 February 2009. Nor, I might say, was any reason given as to why ASIC's action might be thought to stand in need of validation. 9 On the evidence as it stands, ASIC acted under s 601AH(1) and therefore exercised the power created by that section so that the reinstatement it effected of its own motion was regularly and properly made and is now complete. Even if the court had power to validate ASIC's action - which I do not think it does - no need or occasion for validation has been shown. 10 By paragraph 2 of the originating process Data Tech and Mr Chapman seek an order under s 601AH(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." 11 This section clearly confers a power on the court. The court is empowered to make an order that ASIC reinstate the registration of a company, but that power of its nature is exercisable only if the company's registration is not currently subsisting, that is, if the prevailing situation is one of deregistration. That is not the case here. Data Tech's registration was reinstated by ASIC on 11 February 2009. Thereafter, there was no subsisting deregistration. That is the position today. 12 The s 601AH(2) power is therefore not available to be exercised by the court. In any event, exercise of it would entail the making of an order that ASIC do something that it has already done and that it would be meaningless to purport to do again. In that way any order would be futile. 13 The real concern is that reflected in paragraph 3 of the originating process, that is, to enlist the assistance of the court in putting beyond doubt the validity of the things done ostensibly by or in relation to Data Tech during the period of its non-existence between May 2004 and February 2005. Section 601AH(5) deals with that matter. It is in these terms: "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 the Commonwealth or 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 This provision takes effect according to its terms upon reinstatement. It does so whether the reinstatement of the registration by ASIC is of ASIC's own motion pursuant to s 601AH(1) or pursuant to an order of the court directed to ASIC and made under s 601AH(2.) 15 Several recent cases have considered the meaning and effect of s 601AH(5): see, for example: White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441; (2006) 200 FLR 125; CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd [2006] NSWSC 690; (2006) 201 FLR 296; GIO General Ltd v Sabko Ltd [2007] NSWSC 251; (2007) 70 NSWLR 743; Foxman v Credex National Australian Trade Exchange Pty Ltd [2007] NSWSC 1422; (2007) 215 FLR 392; Oates v Consolidated Capital Services Pty Ltd [2007] NSWSC 680; and Brown v Hodgkinson [2008] NSWSC 625. In the first of these cases, Campbell J observed (at [115]) that s 601AH(5) provides "only a limited measure of retrospectivity". In Foxman v Credex National Australian Trade Exchange Pty Ltd, White J said (at [42]) that it is "far from clear what is the intended effect of reinstatement under s 601AH(5)". 16 Of the cases mentioned, I think only the last involved a reinstatement by ASIC of its own motion under s 601AH(1.) As Hammerschlag J there recognised at paragraphs [16] to [18], the status of intervening events - by which I mean events in the period between deregistration and reinstatement - must, in a s 601AH(1) case, be determined solely by reference to s 601AH(5). At [19], his Honour said that reinstatement does not have retrospective effect so far as concerns the revesting of the company' property. 17 Where the court makes an order under s 601AH(2) directing ASIC to reinstate, the court may also make under s 601AH(3) an order validating anything done during the period of non-existence. The fact that restrospectivity under s 601AH(5) is not complete or perfect will often make such orders appropriate in those cases. 18 The court has no such power in a case where, as here, the reinstatement is under s 601AH(1). In a case of this kind, the company and those interested in it must live with the results produced by s 601AH(5) alone, unassisted by any validating order of the court under s 601AH(3) or otherwise. The court has no power to make the order sought in paragraph 3 of the originating process. 19 This case demonstrates in stark form a significant difference between reinstatement pursuant to s 601AH(1) and reinstatement pursuant to s 601AH(2.) In those cases where both sections may be potentially available, the considerations that led to the present application should no doubt be taken into account when choosing the course to be followed. 20 It is sufficient, I think, simply to order that the originating process be dismissed. 21 I would add, having regard to the submissions ably put by Ms Gayle, that there does not appear to be any clear reason of policy why the power to validate given to the court in a s 601AH(2) case should not be made available by the legislature to the court in a s 601AH(1) case as well. As things currently stand however, that is not the law.

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