In the matter of Personnel Concept Group Pty Limited (in liq) [2024] NSWSC 522

In the matter of Personnel Concept Group Pty Limited (in liq) [2024] NSWSC 522 | Case summary | Zoe

Nature of the application and affidavits

By Originating Process filed, by leave, on 29 April 2024 Mr De Bruyn, who is a director of Personnel Concept Group Pty Ltd (in liq) ("Company") seeks an order, under s 509(2) of the Corporations Act 2001 (Cth) ("Act"), that the Defendant, the Australian Securities and Investments Commission ("ASIC"), deregister the Company on 5 May 2027 or alternatively 5 May 2026. That application is directed, not to requiring a deregistration of the Company that would otherwise not take place, but instead, consistent with the case law, to deferring the deregistration of the Company that would otherwise shortly take place to a specified date in the future.
The application is supported by Mr De Bruyn's affidavit dated 23 April 2024. He notes that the Company operated as a recruitment agency business, and was wound up in a creditors' voluntary liquidation, and Messrs Frisken and Bailey were appointed as its joint and several liquidators. On 5 February 2024, Messrs Frisken and Bailey lodged, with ASIC, an End of Administration Return and a notification of their cessation as an external administrator ("Cessation Notification") in respect of the Company. The Cessation Notification proceeded on the basis that they had ceased to be the liquidators of the Company on 31 January 2024, which would have had the consequence that the Company remained in existence, with no liquidators in office, although it remained in liquidation. The effect of the End of Administration Return was that, absent the order that is now sought by Mr De Bruyn, ASIC must deregister the Company at the end of the three-month period beginning the date that return was lodged, that is, on or about 5 May 2024.
Mr De Bruyn requested ASIC to defer the deregistration of the Company in circumstances that he, with the liquidators' consent, had lodged objections to assessments made by the Australian Taxation Office ("ATO") in respect of tax owed by the Company. ASIC had, rightly, noted that it had no discretion in that respect and an application would need to be made to the Court, as has now occurred.
Mr De Bruyn's affidavit in turn refers to director penalty notices issued by the ATO to him, in respect of superannuation guarantee charges and PAYG withholding tax in respect of the Company. He also refers to the issue of amended assessments of superannuation guarantee charges by the ATO, and to an agreement that he reached to pay the ATO a specified sum in settlement of proceedings which had been commenced against him. It appears, however, that the settlement that was reached did not resolve certain liabilities, in respect of superannuation guarantee charges and PAYG withholding tax, which are in turn contested by Mr De Bruyn. He notes that, with the liquidators' authority, his accountants and tax agent have submitted objections in respect of notices issued by the ATO for specified periods, contesting the amounts that are payable under those notices. It appears that the issues in dispute include whether the notices issued by the ATO include persons who are not employed by the Company during the relevant period, or did not receive income from the Company in that period, and, Mr De Bruyn contends, do not reflect all payments made by the Company for employees' superannuation guarantee charge liability in the relevant period. It is not necessary to assess the detail of that claim in order to deal with this application.
Mr De Bruyn seeks an extension of time for the deregistration of the Company, to a fixed future date, under s 509(2) of the Act, on the basis that, plainly enough, his interests are affected by the ATO's decision on the objections that have been submitted with the liquidators' authority. He points to the fact that, under the ATO's published policies, it will not continue to deal with the application if the Company is deregistered, so he will be deprived of any prospect of a positive outcome in respect of the objections, and exposed to significant adverse financial consequences from steps which may be taken by the ATO if the objections are not successful.
Mr De Bruyn also reads an affidavit dated 29 April 2024 of Ms Ma, which refers to service of the proceedings on ASIC, which has indicated that it neither consents nor objects to the proposed orders being made, although it has rightly pointed to the form which such orders should take. Ms Ma also refers to service of the proceedings on the other former director of the Company, who is overseas, but has accepted service of the relevant documents, and indicated that he does not wish to appear in the proceedings. Ms Ma also refers to service of the proceedings on the liquidators, or former liquidators, who have taken no active role, other than in respect of a matter to which I refer below.
By a further affidavit of service dated 29 April 2024, Mr Ratnayake refers to service of the documents, inter alia, on the ATO, which has also taken no active role in the proceedings. Plainly, it was appropriate to serve the proceedings on the ATO, where its interests are potentially affected, in respect of the objections taken and any further proceedings, by the orders that are sought.

[3]

Submissions and determination

Ms Phelan, who appears for Mr De Bruyn, in turn refers to the factual background of the application, to which I have noted above, and addresses the scope of s 509 of the Act, which provides for ASIC's obligation to deregister a company at the end of the three-month period after the End of Administration Return is lodged, but also provides, in s 509(2), that the Court may make an order that ASIC deregister the Company on a specified day, as long as it does so before the end of the deregistration period. This application has been brought, and will be determined, before the end of that period.
Ms Phelan in turn draws attention to several decisions which have considered the scope of that section, including the decision of Barrett J in Re Rosaub Pty Ltd (2005) 54 ACSR 371; [2005] NSWSC 689; my decision in Re ACN 002 408 040 (in liq) (2013) 94 ACSR 485; [2013] NSWSC 470 ("Re ACN 002 408 040"), and the recent decision of McGrath J, which summarised the applicable principles, in Re Miramax Projects Pty Ltd (in liq) [2024] NSWSC 184.
I am satisfied that Mr De Bruyn is here an interested party who can bring an application for an order by the Court that ASIC deregister the Company on a specified future date under s 509(2) of the Act, where it is clear that his interests will be adversely affected if his ability to pursue the objections is lost, as it appears it would be in accordance with the ATO's published policies, if the deregistration takes place at the end of the three-month period after the End of Administration Return, rather than being deferred. I am also satisfied, consistent with the case law to which I have referred above, that an apparently beneficial purpose will be served by deferring the effective date of the deregistration, where that will allow Mr De Bruyn to pursue the objections on the Company's behalf, consistent with the authority which the liquidators had provided to him to do so, and allow a determination of those objections on the merits.
I am satisfied that the time proposed, although long, is consistent with the advice which Mr De Bruyn has received as to the time which is likely to be taken by the ATO to determine the objections, and I have regard to the fact that the structure of s 509 of the Act does not permit a further extension to be given, outside the deregistration period, if this extension is insufficient. On that basis, it seems to me preferable to err on the side of caution, and allow a longer period for the deferral of the deregistration, where the case law establishes that the Court can later vary its order to bring the deregistration forward to an earlier date, in a proper case, if issues are resolved at an earlier date.
One issue of complexity arose in the application, although Mr De Bruyn and his legal representatives have approached it, with the liquidators' assistance, in a pragmatic and sensible way. As I noted above, the liquidators had lodged the Cessation Notice on 5 February 2024, which proceeded on the basis that they were no longer the liquidators of the Company from that date, although its deregistration had not yet taken effect. I addressed a similar question in Re ACN 002 408 040 above, where I noted the possibility that such a return was no more than a liquidator's expression of opinion as to whether he or she had ceased his or her office, and noted the difficulties which would potentially arise if a liquidator ceased in office before a company was in fact deregistered.
It is ultimately not necessary to address that question further here, because Messrs Frisken and Bailey have, constructively, consented to continuing as liquidators, if it were possible to do so after they had given the Cessation Notice, or alternatively to be re-appointed to act as liquidators. It seems to me that the Court can properly proceed on the basis that either, as I noted in Re ACN 002 408 040 above, the Cessation Notice did not have operative effect, to bring about the cessation of the liquidators' office where the Company had not yet been deregistered; or, if that is not the case, Messrs Frisken and Bailey now be re-appointed to act as liquidators, where they consent to do so, and there is every reason to retain the continuity of their appointment. The Court, of course, has power to appoint a liquidator, where the previous liquidator has ceased to act. That matter can be addressed by a form of orders which recognises the possibility that the liquidators remain in office and re-appoints them against the contingency that that is not the case.
I am therefore satisfied that the orders sought by Mr De Bruyn should be made, with the additional order that is necessary to address the position in respect of the confirmation, or resumption, of the role of Messrs Frisken and Bailey as liquidators of the Company.

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