Judgment
1 His Honour: This is an application made under s 601AH of the Corporations Act 2001 for the re-registration of Sabiadorro Pty Ltd ("Sabiadorro").
2 Section 601AH(2) is, so far as is relevant, as follows:
"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; … and
(b) the Court is satisfied that it is just that the company's registration be reinstated."
3 Sabiadorro was incorporated on 27 May 1975. It was placed into liquidation by this Court in proceedings initiated by the Deputy Commissioner of Taxation (No 4285 of 1994) on 26 October 1995. Peter David Rodgers was the person appointed by the Court to be its liquidator.
4 Sabiadorro was noted in ASIC's records as having as its principal activity investment. However, at the date of its winding-up, it was operating a delicatessen at Coffs Harbour. At that date, it owned two investment properties, one at Bulli Heights (which was later sold by the liquidator) and one at Warriewood which was then in the process of being sold by the mortgagee.
5 As at the date of liquidation, there were 15 issued shares in five classes. Of these, the plaintiff, Enzo Casali held two A class shares, one B class share and three ordinary shares. It would appear that the A class shares carry all powers relating to management and control, but no right to dividends or distribution of surplus in a winding-up. The B, C, D and ordinary shares have no voting rights, but the right to all dividends and distribution of surplus.
6 The principal disputants (apart from professional liquidators) are members of the Casali family. The heads of the family appear to be Nino deceased and Rina who each held one A class share and the Casali Family Trust at the address which would seem to be the old family home is said to hold two ordinary shares. The children of that couple are the plaintiff and the second and third defendants, Nicholas Casali (who held one C class share and one ordinary share) and Sandra Wickham (who held one D class share and two ordinary shares).
7 At the date of winding up, Rina Casali and the plaintiff were the directors of the company and the plaintiff's then wife, Jennifer, its secretary.
8 At the time of the liquidator's appointment, Mr Giles Woodgate had been appointed administrator of Sabiadorro following a resolution of its directors.
9 At the same time as the administrator and later liquidator were appointed to Sabiadorro, the same people were appointed to those offices with respect to another company Pacen Pty Ltd ("Pacen"), a company whose directors and shareholders were the plaintiff and Jennifer Casali.
10 At the time of the liquidator's appointment, Sabiadorro was involved with a series of pieces of litigation of which the present second and third defendants were the plaintiffs.
11 On 1 April 1997, all that litigation was settled between Sabiadorro and the second and third defendants by consent orders. These orders noted, inter alia, that the liquidator would withdraw his contention that a deed between members of the Casali family of 31 January 1992 contravened s 205 of the Corporations Act. Although the plaintiff and Jennifer Casali were parties to the litigation, they did not participate in the consent orders. On 14 March 2000, Simos J held that the liquidator's withdrawal was ineffective. Simos J found that the plaintiff and not Sabiadorro was liable for damages for breach of the deed of 1992.
12 The consent order also had the effect of vesting in Mr Rodgers all of Sabiadorro's property pursuant to s 474(2) of the Corporations Act.
13 On 25 May 1999, Mr Rodgers resigned as liquidator and the Court appointed Mr Geoffrey McDonald in his place. On 28 February 2000, Glenn Crisp, the first defendant to these proceedings, succeeded Mr McDonald as liquidator.
14 The final act of the liquidator was on 6 July 2000. It would seem that the liquidator's return was received by ASIC on 14 July 2000 which would mean that, pursuant to s 509 of the Corporations Act, Sabiadorro would have been deregistered on 14 October 2000.
15 On 4 May 2001, the plaintiff filed his originating process to reinstate Sabiadorro's registration. After preliminary directions hearings, the application came before Palmer J on 8 August 2001. His Honour ruled that the second and third defendants be added as parties and that the plaintiff notify the additional defendants in writing as to why Sabiadorro had a claim against them if it were to be reinstated.
16 It is clear that the second and third defendants had the right to be heard on the question before the court; see Re Peter Conyers Holdings Pty Ltd (1996) 14 ACLC 1835, 1849.
17 The amended originating process was filed on 10 August 2001. The only amendment was the addition of parties.
18 In compliance with Palmer J's order, the plaintiff wrote to the second defendant, Nicholas Casali, that because he had lodged and had extended caveats on properties owned by Sabiadorro at Bulli and Leichhardt pursuant to the deed of 1992, which deed was illegal and unenforceable, Sabiadorro had suffered loss and damage being the loss of the development profit from those two properties.
19 A similar letter was written to the third defendant, Sandra Wickham, but this letter added a claim that her obtaining an order prohibiting Sabiadorro from mortgaging or charging any of its assets on 18 May 1993, "effectively prevented Sabiadorro developing its other properties at Warriewood and Castle Hill."
20 The case came on before me on 17 September 2001. Mr T Lee, solicitor appeared for the plaintiff, Mr J T Johnson appeared for the first defendant and Mr M Cohen for the second and third defendants. By consent, the evidence that was read and transcribed before Palmer J was taken to be evidence read or heard by me and that evidence was supplemented by further affidavits and documents. Extensive oral submissions followed, finishing at 3:53pm, making it necessary to reserve my decision.
21 ASIC was asked for its consent to the orders being sought. Consistently with usual practice, it wrote that it would not oppose the application if the liquidator consented to the application and its fee of $434 was paid before determination of the matter. Neither condition has yet been fulfilled. As to the latter, Mr Lee put that the fee would be paid before the order was entered. This is hardly satisfactory as if no order is made, ASIC may have to sue the solicitor for its fee. The Court expects the fee to be paid before the hearing.
22 It was made clear from the outset that, if the order reinstating the company was made, Mr Crisp would retire as liquidator and Mr Dean-Willcocks would be appointed in his place. There was also the distinct flavour that Mr Lee would act for Sabiadorro on a contingency fee basis and that the liquidator's costs would be covered by the plaintiff. There was vague mention of a litigation funder being involved as well.
23 The first question is whether the plaintiff is a person aggrieved by the deregistration.
24 Mr Lee submitted that a "person aggrieved" within the meaning of the section is a person "against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something or wrongfully affected his title to something". He says he took that quotation from Macchia v Nilant [2001] FCA 7. However, the submissions merely quoted a passage and I was not taken to the case. When one examines French J's actual judgment, one can see that the quote is in the midst of a discussion on the differences between s 178 of the Bankruptcy Act 1966 and its predecessors and further that that quote derives from the judgment of James LJ in Re Sidebotham (1880) 14 Ch D 458, 465.
25 Three points must be made about that quote. First, it is preceded in the judgment by these words, "the words 'person aggrieved' do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made." Secondly, in the present type of case, the Sidebotham test may be too strict. Thus, in Re Hall (1957) 20 ABC 21, 29, Clyne J pointed out that in this area of the law, a bankrupt may be aggrieved either by an act or a decision of a trustee in bankruptcy. Thirdly, there are a plethora of modern cases in corporations law dealing with the construction of the term in the Corporations Act including Re Capital Project Homes Pty Ltd (1991) 6 ACSR 310, 311; Westpac Banking Corp v Totterdell (1998) 29 ACSR 448; Re Peter Conyers Holdings Pty Ltd (1996) 14 ACLC 1835 and Payne v Wizard Industries Pty Ltd (1997) 24 ACSR 277.
26 Mr Johnson, for the former liquidator concedes that the plaintiff is a person aggrieved. Mr M Cohen, however, puts this is in issue. He submits that, on the facts in this case, the plaintiff is not a person aggrieved as there is little reasonable possibility of his being appreciably disadvantaged in a legal or practical sense. He relies on three authorities, Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158, 193; Kraft Foods Inc v Gaines Pet Foods Corp (1996) 65 FCR 104, 112 and National Mutual Life Association of Australasia Ltd v Reynolds [2000] FCA 267. With respect, none of these cases take the matter very far. The second of those cited is a trade mark case which provides no guidance in the corporations law situations. The first merely says that the expression must be construed liberally, the third merely mentions the current problem.
27 The mere fact that a person is a shareholder or a director of a deregistered company is insufficient to establish that that person is a person aggrieved within s 601AH; see eg Re Waterbury Nominees Pty Ltd (1986) 11 ACLR 348. As Olney J said in Re Waldcourt Investment Co Pty Ltd (1986) 11 ACLR 7, 12:
"I do not think that either a shareholder or a director as such must necessarily be aggrieved by the cancellation of the registration of a company. An applicant must, in my opinion, show that his interests have been or are likely to be prejudicially affected by the cancellation of registration."