The company went into provisional liquidation under an order of the Court in these proceedings made on 6 June 1988, by which Mr W.J. Hamilton was appointed Provisional Liquidator. On 17 March 1993 Mr Hamilton wrote to the Australian Securities Commission asking that the company be dissolved as defunct under subs.572(3) of the Corporations Law. In his letter he referred to himself as Official Liquidator. On 17 September 1993 the Australian Securities Commission notified Mr Hamilton that the registration of the company would be cancelled and the company would be dissolved at the end of three months unless cause were shown to the contrary. Thereafter, cancellation of registration took effect, presumably on 17 December 1993. Cancellation under subs.572(3) was not authorised by law because the company was not being wound-up. Facts existed in which it was possible for the Commission to act under subs.572(1) in that the company was not carrying on business and was not in operation so that the Commission might have had reasonable cause to believe those facts; it is possible that the cancellation was intended to take place under, and is valid and effectual having regard to subs.572(1).

The plaintiffs wish to reinstate the company and appoint a new Provisional Liquidator so as to bring proceedings for remedies to which they claim the company is entitled against Simon Heath, Hanline Pty Ltd, Mace Newfeld and Mace Newfeld Productions Inc.

There have been earlier attempts to bring proceedings to recover the remedies which would be claimed in the contemplated proceedings, or similar remedies. When the company went into provisional liquidation it had pending proceedings in this court against Hanline Pty Ltd; an object of the provisional liquidation was that the Provisional Liquidator should continue those proceedings notwithstanding some internal conflict in the company, but the Provisional Liquidator discontinued them. The plaintiffs as shareholders brought proceedings for similar claims, seeking to represent the company on the basis of the exception to Foss v. Harbottle, and those proceedings were dismissed. The plaintiffs brought an application by Notice of Motion of 17 August 1994 in proceedings 1810 of 1994 seeking reinstatement of the company, but that notice of motion was not proceeded with when proceedings 1810 of 1994 were dismissed as against Mr Simon Heath, the first defendant in those proceedings, on 2 September 1994.

The present Notice of Motion has been represented to me as urgent on the ground that, without speaking conclusively, the view is available that a statute of limitations could be pleaded against the plaintiffs' claim if it is not commenced before 10 September 1997.

The respondent named in the present Notice of Motion is the company; an unuseful step where the company is defunct. The Australian Securities Commission and Mr Hamilton, who are not named as respondents, have been notified of the proceedings and they have replied in ways which show that they do not wish to be respondents.

The power of the Court to order reinstatement is conferred by subs.574(3) of the Corporations Law under which reinstatement may be ordered by the Court "... 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 ...". If the application succeeds it must be on the basis of the court's being satisfied that it is just that the registration of the company be reinstated.

As the claim intended to be brought or similar or related claims have been under consideration or actually the subject of litigation for over nine years without any positive result and as claims have variously been discontinued, dismissed or lapsed, it does not seem to me to be appropriate to hear and determine the Notice of Motion without considering what persons might have an interest in the issue under subs.574(3). As the Notice of Motion is constituted now it is in effect proposed by the plaintiffs that it will be heard without there being any person taking the position of a respondent, or having any opportunity to take the position of a respondent, oppose it or test it. I have under consideration that it might be appropriate to direct that the following groups of persons be respondents:

(a) the persons whom it is proposed to make defendants in the pending proceedings;

(b) alternatively, such of those persons as are or have been directors or shareholders of the company or of whom it has been claimed that they have been directors or shareholders of the company, bearing in mind that it may be disputed whether they ever truly had that character.

I am not willing to take the Notice of Motion any further until I have been shown what the facts are relating to any person falling within group (b) and I have heard the plaintiffs' contentions about whether it is appropriate to join respondents.

I see that giving time to consideration of this matter may create a difficulty or perceived difficulty because of the expiring statutory limitation period, but the plaintiffs are responsible for the delay and the shortness of time is not a reason for withholding an opportunity to be heard which otherwise should be extended to a person with an apparent interest.

The Notice of Motion may be restored to the list for further directions on one day's notice.

HIS HONOUR: This judgment must be read with my observations of 4 September 1997. On 5 September 1997 the plaintiffs' counsel made some further submissions.

The rules of court do not deal in terms with service of notice of applications under s.574 except for the requirement in Pt.80A r.11(1) for service on the Australian Securities Commission. Counsel contended that the law does not require service of notice of the application on the third party against whom proceedings are to be brought as a necessary precondition to making an order; and further contended that I should not order service of notice.

A first principle for the exercise of the powers of courts is that the persons affected should be heard before a judicial decision is made against them. Audi Alteram Partem. For most applications there are procedural rules requiring service of notice of the application on the persons affected. There are rare instances of statutory provisions authorising the courts to act without such notice. Otherwise courts do not act in those circumstances, or if they do, the persons adversely affected are entitled to obtain reconsideration by the court of the order if they apply reasonably promptly after they learn of the order.

Lawsuits are usually brought against a defined number of defendants so that it is easy to see who should have notice before proceedings are commenced. When an application is made to reinstate a company to the register the persons whose interests might be adversely affected by reinstatement cannot always be identified readily or immediately, and there could be many circumstances in which the impact on some person of action taken on the basis that the company was off the register could not be perceived by the applicant or by the court. Whether or not the court's order reserved liberty to persons so affected to apply to set the order aside, it will be open to the person who was not a party to the application to apply later to set it aside if that person had grounds on which the court should reconsider whether the court is satisfied that it is just that registration of the company be reinstated.

However when it is known to the court that some person has an apparent interest in a reinstatement application, the court would ordinarily make a direction which would enable that person to resist, such as requiring service of notice of the application on a person, making the person respondent to the application or allowing the person to intervene. The absence of any provision in the rules of court dealing with this is not an indication that notice of an application is not necessary; it is to be explained rather by the court's ordinarily acting in accordance with the audi alteram partem rule.

It happens surprisingly often that applications to restore registration of companies are made in circumstances which were claimed to be urgent because a statutory time limit is about to expire. Where the company has insurance and the real burden of the claim will fall on the insurer and not on the company there is unlikely to be any result adverse to a director, shareholder or other person interested in the company from its restoration, while for an insurer, reliance on the fact that the company is no longer on the register or resistance to its restoration would be unmeritorious technicality and I have not known it to happen.

In the present case the apparent interest of Mr Simon Heath in the application is very clear. He is shareholder in the company, one of four shareholders, and the question whether he was a director or not was in dispute when the company went into provisional liquidation; he will probably maintain that he was a director. Further, he or interests associated with him have been repeatedly involved in claims by or in the interest of the company which have been unsuccessful. To my mind the unfairness of deciding whether the court is satisfied that it is just that the registration of the company be reinstated without notice to him is very clear. To proceed that way would obviously be unfair. As a shareholder, alleged director and defendant in the proposed claim he is quite likely to wish to bring forward relevant considerations on the issue raised by s.574. He is not involved as a potential member of a large group of similar interests or nor is he involved on any basis which cannot be clearly seen.

Counsel referred me to case law in which there are some indications of practice on related subjects. In Re Nufloor Pty Ltd [1962] QWN No. 15 p33 Hanger J made an order reserving to the persons against whom it was proposed to take proceedings a right to apply to have the order set aside. It does not appear that the persons proposed to be sued were shareholders, directors or otherwise interested in the company; they may have been. The question of service on interested persons was not considered in the judgment in any other way than by reserving leave to apply, and the application appears to have been made without service on any persons; there was no appearance otherwise than for the applicant liquidators.

In Re Great Eastern Cleaning Services Pty Ltd & The Companies Act (1978) 3 ACLR 794 Needham J ordered that the Deputy Commissioner of Taxation, who was interested in claim against a director which might be defeated in the company was reinstated, be joined as a respondent to an application for reinstatement by a director; the Deputy Commissioner of Taxation wished to bring proceedings against that director. At 796 Needham J said "On the face of it, the proceedings as commenced were sufficiently constituted to permit the court to determine the matter in issue, that is, whether the company's name should be restored to the register. It was only when one looked at the evidence filed in support of the summons that it became clear that the making of the order could adversely affect the legal rights of the Commissioner, in that the proceedings which he has commenced against the applicant could founder. The court, in determining whether a company's name is to be restored to the register, should, before exercising its discretion to make or refuse such an order, take into account what effect such an order could have, not only on the applicant, but on other persons. It seems to me that the Commissioner is in a position to put before the court matters which could be relevant to the exercise of the discretion. There is no one else who has been shown to have any interest in putting forward such matters."

In Re P.J. Staunton Pty Ltd (1992) 9 ACSR 302 G.N. Williams J adjourned the proceedings for several reasons including that no attempt had been made to serve the application on debtor-shareholders who would be adversely affected by the order and who could raise various conceivable grounds against the making of the order. G.N. Williams J reviewed earlier authorities before reaching this conclusion. Among other observations his Honour said at 307 "The rights of the debtor-shareholders cannot, particularly given the last part of s.571(1), be protected by making an order in the form adopted in Nufloor. An order under s.571(1) must be a final order and the appropriate time for raising defences available to the persons adversely affected is when the initial application under that section is made." There are special difficulties, as his Honour perceived, for an order declaring that a dissolution was void while reserving liberty to apply to set the order aside, greater difficulties than for an application under subs.574(3) to reinstate a company; but the decision illustrates the importance of notice to persons whose interests are known.

Re Harule Pty Ltd ex parte Olita Super Readymixed Concrete Pty Ltd (1994) 13 ACSR 500 was an application for reinstatement under subs.459(6) of the Companies (NSW) Code and related orders. In that case attempts had been made to serve particulars of the application on the person against whom it was proposed the company would bring proceedings, and there had been further attempts after the court had directed further attempts; see p501. The course taken by Santow J illustrates the course which the court should take where a specific person is proposed to be the subject of proceedings which the reinstatement will facilitate.

Review of the cases to which counsel has referred me has confirmed my view that the court does not and should not adopt any practice in which notice to persons affected is treated as unimportant or the burden is put on such persons of applying to set aside an order after it has been made.

An element presented in this case which requires consideration is that it is said that, on one view of the facts, a limitation period will expire on or after 10 September. As the controversy has existed in various forms for 9 years or more, and three earlier litigations relating to it have been unsuccessful, the last several years ago, I am of the view that this consideration should not override the ordinary requirement that notice be given.

The only respondent named in the notice of motion was the company. The only parties to the litigation as at present constituted are the plaintiffs, who are two shareholders, and the company. The plaintiffs' counsel told me that with the exception of Mr Heath he expected to be able to show that all shareholders and directors or alleged directors are plaintiffs, or support or consent to the application. I will accept this assurance for the time being; it remains for the plaintiffs to prove that the facts are as assured when the application comes on to be determined. However I should direct that Mr Heath be a respondent and that he be served with the notice of motion.

(1) I direct that Simon Heath be added as a second respondent to the Notice of Motion.

(2) I appoint Monday 13 October 1997 at 10 am before the Companies Judge for the further hearing of the Notice of Motion.

(3) I direct that the Notice of Motion and a copy of this order be served on Simon Heath.

Re Harule Pty Ltd ex parte Olita Super Readymixed Concrete Pty Ltd

Re P.J. Staunton Pty Ltd (1992) 9 ACSR 302

Re Harule Pty Ltd ex parte Olita Super Readymixed Concrete Pty Ltd (1994) 13 ACSR 500