Gorman v Australian Securities and Investments Commission

REASONS FOR JUDGMENT 1 An application has been made before me this morning under s 601AH(2) and s 500(2) of the Corporations Act 2001 (Cth), for the reinstatement of a company now known as ACN 106 277 758 Pty Limited (in liquidation). The company was formerly known as the Institute of Executive Coaching Australia Pty Limited. 2 That company is a party to proceedings in the Industrial Court which have been brought by the plaintiffs, Ms Gorman and Corporate Impact Consulting Pty Limited. A question has arisen in the Industrial Court as to whether that Court has jurisdiction to make orders under s 106 of the Industrial Relations Act 1996 (NSW) in the absence of the company as a party. 3 I am satisfied on the evidence before me this morning that the plaintiffs are persons aggrieved, and that it is appropriate to make an order for the company to be reinstated. 4 A question arises as to the effect of the reinstatement of the company. The issue which arises is whether the former liquidators of the company remain as liquidators of the company upon reinstatement. There is a divergence of views as to whether this is in truth the effect of making such an order. 5 Mr Fernon SC, who appears this morning for the plaintiffs, has referred me to a line of authorities which reveals the dispute. I do not intend to record what was said in those authorities, but the cases and relevant paragraphs are: Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 at [50]; Ramantanis v G and M Excavations; v I and M Excavations [2003] NSWSC 1250 at [7] to [8]; Murray Halstead v CTS Quality Building Products Pty Ltd (in liq) [2006] NSWSC 1022 at [12]; JP Morgan Portfolio Services Limited v Deloitte Touche Tohmatsu (2008) 65 ACSR 636 at [7] -[8], and [10]. With the exception of the decision of Austin J in ACCC v ASIC, these authorities support the proposition that on registration of a company, the liquidator who was in office at the time of deregistration is not automatically reinstated. 6 However, in Best v Yellow Express Carriers Limited [2004] NSWSC 666, Young CJ in Eq took a practical view to the question. His Honour took the view that in circumstances where the previous liquidator was served with the relevant papers relating to the application for reinstatement, and did not reply, it was open to the court to infer that the liquidator had no further interest in the matter. His Honour proceeded at [6] to observe that the company needed to have a liquidator and, in his view, the expedient and practical course was to remove the previous liquidator and to appoint another liquidator in accordance with the provisions of s 503 of the Corporations Act. 7 I have evidence before me today that indicates that the previous liquidators were served with notice of the application, but initially indicated no interest in continuing in office as liquidators of the company. However, there was then further communication with the previous liquidators which appeared to indicate a possible change of heart. However, on 22 May 2008, the plaintiffs' solicitors wrote to the solicitors for the previous liquidators requesting answers to a number of questions which would bear upon the issue of whether it was appropriate for the previous liquidators to continue in office upon reinstatement of the company. There has been no response to that letter. 8 It follows, in my view, that the appropriate course is not to seek to express any view as to the difference of opinion which has emerged in the cases to which I have referred, but, rather, to follow the expedient and practical course endorsed by Young CJ in Eq. 9 The principle to be applied in applications such as this was succinctly stated by Santow J in Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230 at 234. His Honour observed that the correct balance is struck by permitting a liquidator to act as such even if there be a prior involvement with the company in liquidation, provided that involvement is not likely to impede or inhibit the liquidator from acting impartially. His Honour said that, in short, the question should be whether there would be a reasonable apprehension by any creditor of lack of impartiality on the liquidator's part in the circumstances by reason of prior association with the company or those associated with it, including creditors or, indeed, any other circumstance. 10 I do not need to determine whether it is necessary to strike such a balance or how that balance ought to be struck in the present case. There is, I think, insufficient evidence before me to suggest that there may be any lack of impartiality on the liquidator's part, but the fact which, points toward the course that I have indicated is the failure of the previous liquidators to respond to the letter of 22 May 2008. There can be no suggestion of any want of impartiality, but the failure of the previous liquidators to respond to the letter or to appear before me this morning, I think, impels the adoption of the course proposed by Young J. 11 I have been provided with short minutes of order which provide for reinstatement and for the removal of the previous liquidators with a new liquidator, Mr Steven Wesley Hathaway, to be appointed as liquidator of the company. I have in evidence before me a letter from ASIC dated 13 June 2008. The letter states that ASIC will not oppose the application for reinstatement of the company, provided five stipulated conditions are satisfied. There is no difficulty with any of these conditions, but it is necessary to add to the draft orders that were submitted to me this morning by Mr Fernon an order that the plaintiffs pay ASIC's costs of $434, and I will so order. 12 I should add that condition 5 referred to in ASIC's letter requires that the liquidator notify ASIC upon conclusion of the winding up. I will therefore direct the liquidator to so notify ASIC. 13 I will make orders in terms of [1] to [7] of the short minutes of order handed to me this morning by counsel, which I will initial and date. As I have said, I also order that the plaintiffs pay ASIC's costs of $434, and direct that the liquidator be directed to notify ASIC upon conclusion of the winding up. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.