Effect of reinstatement
(5) 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."
Law Reform (Miscellaneous Provisions) Act 1946
" 6 Amount of liability to be charge on insurance moneys payable against that liability
(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.
(2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later than the happening of that event, the provisions of subsection (1) shall apply notwithstanding the winding-up.
(3) Every charge created by this section shall have priority over all other charges affecting the said insurance moneys, and where the same insurance moneys are subject to two or more charges by virtue of this Part those charges shall have priority between themselves in the order of the dates of the events out of which the liability arose, or, if such charges arise out of events happening on the same date, they shall rank equally between themselves.
(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured:
Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken.
(5) Such an action may be brought although judgment has been already recovered against the insured for damages or compensation in respect of the same matter.
(6) Any payment made by the insurer under the contract of insurance without actual notice of the existence of any such charge shall to the extent of that payment be a valid discharge to the insurer, notwithstanding anything in this Part contained.
(7) No insurer shall be liable under this Part for any greater sum than that fixed by the contract of insurance between the insurer and the insured.
(8) Nothing in this section shall affect the operation of any of the provisions of the Workers Compensation Act 1987 or the Motor Vehicles (Third Party Insurance) Act 1942 .
(9) Despite subsection (8), this section applies in relation to a policy of workers compensation insurance entered into by an employer (whether entered into before or after the commencement of this subsection), where the employer:
(a) being a natural person, has died, or is permanently resident outside the Commonwealth and its Territories, or cannot after due inquiry and search be found, or
(b) being a corporation (other than a company that has commenced to be wound up), has ceased to exist, or
(c) being a company, corporation, society, association or other body (other than a company that has commenced to be wound up), was at the time when it commenced to employ workers to which the policy relates incorporated outside the Commonwealth and its Territories and registered as a foreign company under the laws of any State or Territory and is not so registered under any such law, or
(d) being a company, is in the course of being wound up."
3 The facts relevant to this application are within very narrow compass. The accident, which occurred at the construction site that is alleged to have injured Mr Immer, also fatally injured Mr Brendan Gerard Brown, the director of Hi-Rise. That accident occurred on 8 February 2005, and Hi-Rise was deregistered as a corporation on 21 April 2006. Mr Immer commenced proceedings on 7 February 2008.
4 Mr Immer alleges in the statement of claim that he was employed by Marr Contracting Pty Ltd, the supplier of the mobile crane and crew, as a dogman, and was assisting with the installation of concrete panels. The concrete panels were used to construct a concrete floor and the accident occurred when one or more of the panels cracked, the floor fell away and Mr Immer fell through the floor, suffering injury, loss and damage. On its face, the Statement of Claim pleads an arguable case against each of the named defendants.
Reinstatement of Hi-Rise
5 QBE is the fourth cross-defendant to the second cross-claim. Lee & Lyons Lawyers represent QBE in the proceedings. They also, purportedly, represent Hi-Rise and are the legal representatives identified on an affidavit filed on behalf of Hi-Rise on the motion. That affidavit is the affidavit of Nicholas Bruce Calnan of 9 March 2009. The affidavit attests to the fact that QBE was the relevant insurer of Hi-Rise at all material times and that Hi-Rise was placed into liquidation and then deregistered, effective 21 April 2006. This state of affairs is confirmed in the affidavits of Andrew Ronald Howard of 27 March 2009 and 14 April 2009, filed on behalf of Baseline. It is unclear, in the circumstances, how Hi-Rise appears in the proceedings or files an affidavit.
6 As a consequence of the deregistration being effective from 21 April 2006, Hi-Rise was defunct at the time that proceedings were commenced by Mr Immer, and at the time that Baseline commenced the cross-claim, and the proceedings against it are a nullity. For proceedings to be commenced effectively against a party, such party must be in existence, as a person, at the time of the commencement: see Morris v Harris [1927] AC 252; Schlieske v Overseas Construction Co-Pty Ltd [1960] VR 195 at 196; Re Kilkenny Engineering Pty Ltd (in liq) (1976) 13 SASR 258; International Bulk Shipping & Services Ltd v Minerals & Metals Trading Corporation of India [1996] 1 All ER 1017.
7 QBE contends that it is unjust to reinstate Hi-Rise, because of the delay in bringing the proceedings for reinstatement and substitution, the lack of information as to the circumstances of Hi-Rise prior to deregistration, the death of its director, the lack of information as to the company's future activities, and the lack of information as to whether any person is likely to be prejudiced by the reinstatement. Each of the foregoing factors, if it were made out, would be relevant to the discretion to reinstate. Further, QBE submits that reinstatement under the Corporations Act cannot retrospectively render efficacious the service of the statement of claim or the service of the cross-claim.
8 There is some merit in the submission that there has been some delay in seeking to regularise the proceedings. As earlier stated, the proceedings were commenced almost two years after the deregistration of the company and no sufficient explanation has been given as to the action, if any, taken on behalf of Mr Immer, in order to ascertain the status of each of the defendants. The same criticism, the necessary changes being made as to date and parties, may be made of Baseline, in relation to the commencement of the cross-claim.
9 Baseline has made this procedural application for the purpose of regularising the proceedings and in order, ultimately, to substitute QBE for Hi-Rise. QBE was aware of the proceedings at least from the time it was served with Baseline's cross-claim to which it is separately joined. Moreover, QBE have not shown any special prejudice and the only material before the Court is that its prejudice is limited to the possibility that, following reinstatement of Hi-Rise, it may be substituted in its place as the defendant and/or cross-defendant. On one view, QBE may not have an interest or standing in opposing the reinstatement of Hi-Rise. Nevertheless, QBE, as already stated, opposed the reinstatement.
10 Even though Baseline seeks to reinstate Hi-Rise for the limited purpose of regularising the proceedings and substituting QBE in lieu of Hi-Rise, if the Court were minded to make a reinstatement order, it could not do so for a limited purpose only: Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559. The reinstatement, if ordered, would be for all purposes, even though the catalyst, and rationale, is to regularise the proceedings. Even if the Court were to take the view that the company to be reinstated would exist for only a short time, such reinstatement, while effective, would be valid and operative for all purposes.
11 An application for reinstatement under the Corporations Act may be made by a former liquidator or a person aggrieved by the deregistration. A liberal construction has been given to the term "a person aggrieved" and persons may fit into that category even though, at the time of deregistration, they did not. Baseline, which now seeks to proceed against the deregistered company, and cannot, is a person aggrieved by the deregistration.
12 The mere fact that Hi-Rise, if reinstated, is likely to be wound up again almost immediately thereafter, does not preclude an order for reinstatement being made. Baseline's motion seemed to rest on the proposition that Hi-Rise, if it were reinstated, would be treated as if it were, and always had been, registered for all of the time since it was deregistered. Orders for the reinstatement of a corporation under the provisions of s 601AH of the Corporations Act have effect nunc pro tunc (see s 601AH(5) of the Act), but do not validate a step taken in relation to the company during the time of its deregistration: see CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd [2006] NSWSC 690; (2006) 201 FLR 296. Thus, it would seem, reinstatement of Hi-Rise would not, without further steps being taken, render the service, if any, that has already been effected, valid or efficacious.
13 I am not persuaded, assuming (without deciding) QBE has standing to oppose the application, that the application for reinstatement should be refused on the basis of any of the discretionary factors upon which QBE relies. I do not consider that the delay has caused prejudice of any material kind and I consider that it is just, and consistent with the achievement of the most just, quick and cheap resolution of the real issues in these proceedings, for the reinstatement order to be made. While QBE asserts that it has lost the opportunity of investigating some aspects of the circumstances that will be relevant to the proceedings, it is not obvious what opportunity has been lost that was not lost by virtue of the death of Mr Brown. In other words, I am persuaded that there is no additional prejudice to QBE, associated with the reinstatement of Hi-Rise and the substitution of QBE in its place.
14 QBE submits that a more convenient approach would be to refuse the application and require Baseline to apply under s 601AG of the Corporations Act to proceed directly against QBE. In order to make such an application, Mr Immer and/or Baseline would need an extension of time and QBE has not waived any rights it may have in that respect. Nor has QBE submitted that s 601AG of the Corporations Act is unarguably available (even with an extension of time) to either or both Mr Immer and/or Baseline. In those circumstances, it is appropriate to exercise the discretion under s 601AH and reinstate Hi-Rise: see URS Australia Pty Ltd v Australian Securities and Investments Commission [2007] FCA 1939; (2007) 25 ACLC 1,648.
15 However, there are some aspects of this application that require more attention. Prior to its deregistration, Hi-Rise was in liquidation. The identity of the liquidator is not before the Court. Further, the liquidator is not a party to the proceedings. Nor is Mrs Brown, the last remaining director and shareholder, although she has been notified of these proceedings and her legal representative contacted. If reinstatement were to be ordered, by virtue of the operation of the Corporations Act, the company would be reinstated into the control of the liquidator: Johnston v Centralian Industries Pty Ltd (1995) 13 ACLC 1,064.
16 If orders were to be made by the Court, it would be necessary to appoint a liquidator and make orders for the service of the Statement of Claim. It seems, on a preliminary view, that an order for substituted service by service on QBE may be appropriate, especially in light of the application for substitution. Alternatively, and possibly more conveniently given the filing of an affidavit, substituted service might be effected on Lee & Lyons. However, I have not heard the parties on that issue, and would give QBE, any liquidator appointed and Mrs Brown the opportunity to put submissions on such a course: see Johnston, supra, and compare Chappell v Coyle (1985) 2 NSWLR 73. ASIC has been notified of these proceedings and, on the basis of some detailed or inconsequential conditions, does not oppose the orders.
Substitution of QBE
17 The written submissions filed by QBE on the operation of the Law Reform (Miscellaneous Provisions) Act and the substitution of QBE under s 6(4) of that Act are fundamentally based upon two discrete propositions. Firstly, QBE submits that, because the proceedings commenced against Hi-Rise are a nullity, no order can be made for substitution. Secondly, if such an order were within jurisdiction, the Court would not do so because the precondition to the exercise of the discretion has not been satisfied and, in the alternative, for discretionary reasons, the discretion ought not be exercised.
18 I have determined (see above) that the proceedings commenced against Hi-Rise (a then non-existent company) were a nullity and, until that issue is rectified, no order for substitution can be made. However, each of the issues has been agitated before the Court. As to the preconditions to the exercise of the discretion, the Court is satisfied that Baseline has an arguable case against Hi-Rise (as does Mr Immer) (AFG Insurances Ltd v Andjelkovic (1981) 54 FLR 398 at 400; Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 at [21]); that there is an arguable case that the policy of insurance issued by QBE responds to the claim made by Hi-Rise (AFG Insurances, supra; Tzaidas, supra); and that if judgment were obtained against Hi-Rise, it would be unable to meet that judgment (Oswald v Bailey (1987) 11 NSWLR 715 at 742; Zhang v Minox Securities Pty Ltd [2008] NSWSC 689 at [11]).
19 The foregoing disposes of the preconditions to the exercise of discretion. To the extent that QBE claim a lack of liability on the basis that Hi-Rise has not made a claim, if such could ever be a basis upon which the provisions of s 6(4) of the Law Reform (Miscellaneous Provisions) Act could be circumvented, it would seem to be covered by the provisions of s 54 of the Insurance Contracts Act 1984 (Cth), being an act (defined to include an omission) of the insured, occurring after entry into the contract, by reason of which the insurer was seeking to refuse to pay the claim. I have already determined that the insurer's interests are not prejudiced, and therefore the amount of the cover is not subject to any diminution.
20 As a consequence of the foregoing, coupled with the absence of any substantial prejudice beyond the ordinary prejudice associated with being a defendant in proceedings, grounds for making an order have been established and no good reason exists for refusing the order.
Conclusion
21 The Court proposes to make orders in or to the following effect: