DAVID HENRY PACANOWSKI v AUSTRALIAN SECURITIES COMMISSION

note that as a result of the unsuccessful trading of Galite, a guarantee that had been given by Pacanowski to the Commonwealth Bank covering loans made to the company was called upon. As a consequence Pacanowski paid the bank $364,584.67. Pacanowski contends that as a consequence Galite became indebted to him in the sum of $364,584.67 and that if the company is successful in the proceedings against Wygoda, funds may become available that will permit the discharge of all or some of that debt. As a result of the unsuccessful trading of the company it has accumulated tax losses of $365,399. While the underlying dispute between Pacanowski and Wygoda has been settled, I have been informed that Galite's action against Wygoda in the Supreme Court will continue. While this was originally identified by Pacanowski as the reason for seeking the reinstatement of the company under s574(3), I have since been informed that it is Pacanowski's intention to provide funds to Galite and for Galite then to operate as a service company for a company with which he is associated, namely Marblised Products Pty Ltd. This will be done by transferring to Galite certain unencumbered assets from that company and another company, Makawe Pty Ltd, which is an investment company with which Pacanowski is associated. As a result Pacanowski has expressed the opinion in an affidavit sworn on 30 April 1995 that Galite will thus derive income, make profits and be put it in a position to repay its debt to him. I have no reason to doubt that this opinion is advanced bona fide. Section 574 raises, relevantly, two issues. The first is whether Pacanowski is a person aggrieved within the meaning of s574(3) and the second, if so, whether his application should be granted on the basis that it is just that the registration of the company be reinstated. In relation to his standing to bring the application the applicant relied upon Re L Carroll Ltd (1975) 1 NZLR 79 in which O'Regan J restored a company to the Register of Companies because shareholders wished to take advantage of accumulated losses of the company for taxation purposes and recommence the trading activities of the company. In that case it was necessary for the applicant, which was the company itself, to establish under s336(7) of the Companies Act 1955 (NZ) that the applicant felt aggrieved by the company having been struck off. While that matter was not expressly addressed by his Honour, it is clear from the approach he took that his Honour accepted the company was aggrieved and thus had the requisite standing. The expression "person .... aggrieved" should not be narrowly construed: see Re Proserpine Pty Ltd (1980) 5 ACLR 603. Pacanowski's interest is, at least arguably, as a creditor of the company and, as such, he has an interest in the pursuit of the litigation of the company against Wygoda: see Re JJ Weeks Construction Pty Ltd (1982) 1 ACLC 425. Further, having regard to Re L Carroll Ltd, supra, Pacanowski may be accepted as having an interest deriving from the future use that might be made of accumulated losses for taxation purposes. I accept that Pacanowski has standing to make the application. The question then arises as to whether it is just for the company to be reinstated. No satisfactory explanation has been given as to why circumstances were permitted to arise where statutory returns were not lodged and which led to Galite being deregistered. However the Australian Securities Commission has appeared and indicated it does not object to Galite's reinstatement. Its attitude is relevant: see Re Immunosearch Pty Ltd (1990) 8 ACLC 1031. While the position of ACS is subject to certain conditions being satisfied, it appears that the conditions have or will be met by Galite and Pacanowski in the event that an order is made reinstating it. The language of s574, in so far as it speaks of the Court being "satisfied that it is just" that registration be reinstated, is imprecise and invests the Court with a power requiring the exercise of a broad value judgment. I am satisfied that Pacanowski has, during the trading activities of Galite, guaranteed loans to the Company to his detriment and in those circumstances has a legitimate interest in availing himself of benefits that might flow from the Company being reinstated and thus being able to resume trading. Accordingly s574(3) is, in my opinion, satisfied. I order the reinstatement of the registration of Galite pursuant to s574 of the Corporations Law. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.