Company lawyers are familiar with the "company extracts" which can be obtained by searching the electronic database maintained by the Australian Securities and Investment Commission ("ASIC"). In these proceedings, questions arose as to whether, and in what circumstances, the Court could make orders removing entries from that database. At the end of the argument on 12 October, I refused the defendant's application to have references to these proceedings removed from ASIC's publicly searchable records. The following are my reasons for doing so.
The defendant, Playup Australia Pty Ltd ("Playup") and its subsidiaries operate what are described as "fantasy sports" and betting websites. In March 2018 Playup entered into a contract to purchase all the shares in Best Bet (NSW) Pty Ltd which operates an online bookmaking business. The shares were purchased from the plaintiff, Ryan Kay, who was formerly the sole director and majority shareholder of that company. The purchase price was $1.6 million, with $1 million payable at the time of purchase and the balance payable in twenty-four monthly instalments of $25,000. The purchase was completed in May and the first instalment was due in June.
Daniel Simic is the sole director of, and (I assume) a shareholder in, Playup. Playup failed to make the first instalment payments to Mr Kay under the purchase agreement, which were due on 22 June and 22 July. According to Mr Simic, this was because the agreement provided for certain adjustments to be made reducing the amount and there was insufficient information available to work out how much was to be paid.
Mr Kay took the position that under the terms of the share sale agreement, Playup's failure to make the June and July instalment payments meant that the whole deferred amount of $600,000 had become due and payable. On 10 August Mr Kay had a statutory demand served on Playup. The amount claimed in the demand was $589,292.68. This represented the difference between $600,000 and the adjustment in favour of Playup, which Mr Kay calculated as being $10,707.32.
According to Mr Simic, on 13 August he caused payment to be made to Mr Kay of $19,242.24 ($50,000 for the June and July instalments less Playup's calculation of the adjustment, which was $30,757.76). Mr Simic also tried to contact Mr Kay to have him withdraw the statutory demand. He sent a number of emails, but there was no response.
Playup did not make any application to have the statutory demand set aside. The period for compliance with the statutory demand expired on 1 September. Mr Kay commenced these proceedings on 10 September, seeking to have Playup wound up. The return date for the Originating Process was 11 October but that was brought forward to 25 September after Playup applied for the proceedings to be expedited. The proceedings were originally to be heard before Black J on 5 October but were then fixed for hearing before me on 11 October. The hearing proceeded on that day, with supplementary submissions being made on the afternoon of 12 October.
I was informed from the Bar Table, without objection, that on both 25 September and 5 October, Playup offered to pay the disputed amount into Court but this was not considered necessary.
The Corporations Act 2001 (Cth), ss 465A(a) and 470(1)(a), required Mr Kay to lodge notice of the winding up application with ASIC in the prescribed form (Form 519) and this was done. A current extract from the database as it was at the beginning of the hearing on 11 October was tendered and showed that the form notifying the application had been lodged and the application had been recorded in the database.
On 11 October, the day of the hearing, the winding up application was settled. Playup undertook to pay out Mr Kay's debt and Mr Kay agreed to withdraw the application. In addition, as part of the consent orders for the resolution of the proceedings, Playup sought orders directing that reference to the winding up application be removed from the ASIC database.
Mr Simic gave evidence as to why Playup wished to have the reference to the application removed from the database. He said that Playup hoped to float later this year. He said people who had seen reference to the application had contacted him, concerned about Playup's financial position. He said that the notification was "spooking both investors and punters".
On withdrawal of the application, Mr Kay was obliged to lodge a notice in the prescribed form (also a Form 519) with ASIC of the withdrawal: s 470(1)(c). The Corporations Regulations 2001 (Cth) would also require, should an order be made under s 1322(4)(b) as sought by Playup, lodgement of an office copy of the order with ASIC: reg 1.0.20(j). As ultimately formulated, the order sought by Playup would have required ASIC to remove from any publicly available register kept by ASIC under the Act any reference to:
(a) these proceedings;
(b) Form 519 lodged by Mr Kay;
(c) "any further forms relating to the discontinuance or withdrawal of these proceedings" upon their subsequent lodgement; and
(d) the form annexing a copy of the Court's order under s 1322.
Following the settlement, Mr Kay did not oppose the orders sought by Playup. Indeed, part of the terms of settlement involved Mr Kay agreeing to take whatever steps were necessary to try to persuade ASIC to remove reference to the winding up application from its database. But, of course, the question whether it is proper to make such an order compelling ASIC to remove material from its database is a matter for the Court, not merely a matter of agreement between the parties.
The application by Playup was made by way of Interlocutory Process in the proceedings. The appropriate course would have been to make ASIC a respondent to the application, or at least to serve notice of the application on ASIC (see Re Centura Global Holdings Pty Ltd (2016) 111 ACSR 185; [2016] NSWSC 62 at [58]). Playup sought to address this problem by providing, in the consent orders, for a copy of the removal order, once made, to be served on ASIC and for liberty to be reserved for ASIC to move to set it aside. As I decided to reject the application, I do not need to consider whether this was a satisfactory way of proceeding.
Playup's application relied on the Court's power under s 1322(4)(b) of the Act to rectify registers kept by ASIC. Alternatively, reliance was placed on the Court's power under s 467(1)(c) to make interim or other orders on the hearing of the winding up application. It is convenient to consider s 1322(4)(b) first, as that provision has received more extensive discussion in the authorities. It provides:
(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
…
(b) an order directing the rectification of any register kept by ASIC under this Act;
Registers and the registration of documents are dealt with in Part 9.1 of the Act. Section 1274(1) relevantly provides:
Registers
(1) ASIC must, subject to this Act, keep such registers as it considers necessary in such form as it thinks fit.
…
(8) If ASIC is of opinion that a document submitted for lodgment:
(a) contains matter contrary to law; or
(b) contains matter that, in a material particular, is false or misleading in the form or context in which it is included; or
(c) because of an omission or misdescription has not been duly completed; or
(d) contravenes this Act; or
(e) contains an error, alteration or erasure;
ASIC may refuse to register or receive the document and may request:
(f) that the document be appropriately amended or completed and resubmitted; or
(g) that a fresh document be submitted in its place; or
(h) where the document has not been duly completed, that a supplementary document in the prescribed form be lodged.
(9) ASIC may require a person who submits a document for lodgment to produce to ASIC such other document, or to give to ASIC such information, as ASIC thinks necessary in order to form an opinion whether it may refuse to receive or register the first-mentioned document.
(10) ASIC may, if in the opinion of ASIC it is no longer necessary or desirable to retain them, destroy or dispose of:
(a) in relation to a body corporate:
(i) any return of allotment of shares for cash that has been lodged for not less than 2 years; or
(ii) any balance-sheet that has been lodged for not less than 7 years or any document creating or evidencing a charge, or the complete or partial satisfaction of a charge, where a memorandum of satisfaction of the charge has been registered for not less than 7 years; or
(iii) any other document (other than the constitution or any other document affecting it) that has been lodged or registered for not less than 15 years; or
(c) any document a transparency of which has been incorporated with a register kept by ASIC.
Section 1274A relevantly provides:
Obtaining information from certain registers
(1) In this section:
"data processor" means a mechanical, electronic or other device for the processing of data.
"register" means a register kept by ASIC under this Act.
"search" includes inspect.
…
(3) ASIC may permit a person to search a prescribed register by using a data processor in order to obtain prescribed information from the register.
(4) ASIC may make available to a person prescribed information (in the form of a document or otherwise) that ASIC has obtained from a prescribed register by using a data processor.
(5) Nothing in this section limits:
(a) a power or function that ASIC has apart from this section; or
(b) a right that a person has apart from this section.
In Re Voxson Sales Pty Ltd [1989] 1 Qd R 711, receivers were appointed to the assets of two companies. The companies did not contest the validity of the appointment, but contended that the appointment was inconsistent with the terms of the relevant security agreements. The companies arranged to pay out the secured creditor which released the relevant charge. The companies then applied for an order that five specified forms lodged with respect to the receivership "be removed from the register" of the National Companies and Securities Commission (the forerunner of ASIC). Neither the creditor nor the receivers objected, but the NCSC did.
Ambrose J declined to make the order. He said (at 717, emphasis added):
I have no doubt that in an appropriate case a court may under [the equivalent provision to s 1332(4)(b) under the former Companies Code] direct a rectification of a register which will be achieved in some cases perhaps by altering or correcting information stored on a microfilm in a microfiche jacket kept with respect to a particular company.
I am unpersuaded however that a register may be "rectified" by removing and destroying microfilm of documents which have been lodged with and accepted by the Commission pursuant to the various sections of the Code to which I have referred. The Commission is given significant powers…to refuse to receive a document which is lodged with it.
Steps may well have been taken by the applicants prior to those documents being lodged to prevent their lodgement. From time to time proceedings are taken to prevent the filing of an application to wind up a company. Once an application to wind up however has been made that fact cannot be "hidden" from public gaze merely because upon the hearing of the application it is shown that the application ought never to have been made.
In OneSteel Reinforcing Pty Ltd v Westpoint Constructions Pty Ltd (2005) 23 ACLC 1384; [2005] FCA 808, OneSteel served a statutory demand on Westpoint for the payment of a trade debt "for reasons which cannot be explained, the demand was not received by Westpoint". The demand was not satisfied and OneSteel applied to wind up Westpoint. A Form 519 was lodged with ASIC pursuant to s 470. When served with the originating process for the winding up application, Westpoint immediately paid the debt, and OneSteel agreed to discontinue the winding up application. Westpoint then sought an order in the form sought by Playup in this case (see [11] above).
Westpoint made this application because of concerns about the effect of the notice on creditors and financiers. The evidence showed that one of Westpoint's financiers would not permit a finance facility which had previously been granted to be drawn down "until this matter is resolved". ASIC neither consented to nor opposed the application. Finkelstein J said:
I am satisfied that had the statutory demand come to the attention of Westpoint the dispute with OneSteel would have been resolved immediately, as in due course it was. It is unfortunate that things went as far as they did. In the unusual circumstances of this case I would make the orders sought provided there is power to do so.
His Honour made the order sought, distinguishing Re Voxson. Referring to the two emphasised passages quoted at [18] above, he said:
[10] As to [Ambrose J's] first point, the present application is sufficiently different not to be covered by his reasoning. Westpoint does not seek the destruction of records lodged with ASIC. Those records will be retained. Westpoint seeks only the removal of an entry from the register. Section 1322(4)(b) gives the court power to direct the "rectification of any register kept by ASIC". One meaning of "rectify" is to "reform" and I am asked to order the register be reformed by the removal of an entry. I am in no doubt that I have the power to make that order.
[11] As to the second point made by Ambrose J, concerning the question of discretion, that point was made in relation to the particular circumstances of the case. For reasons which I have explained, I am satisfied that the discretion should be exercised in favour of Westpoint on the facts of this case.
In Lavercombe v Auscott Ltd (2006) 202 FLR 390; [2006] NSWSC 867 the plaintiff served a statutory demand on the defendant. The defendant did not apply to have the demand set aside and the plaintiff commenced winding up proceedings. But by the time the application came on for hearing the debt had been paid. The winding up application was dismissed and the defendant sought a further order directing ASIC to remove "all references to the winding up application having been made" from "the records from the company maintained by the Commission".
Barrett J (as his Honour then was) considered that three issues arose. First, whether there was a "relevant register kept by ASIC" for the purposes of s 1322(4)(b). Second, whether the order sought involved "rectification" of that register. Third, whether to make the order in the exercise of the Court's discretion.
In dealing with the first issue, his Honour observed that some provisions of the Act specifically provide for ASIC to establish and maintain registers (at [24]). But (at [25]):
Some provisions of the Act contemplate "registration" by ASIC, apparently without reference to any register, but on the basis that ASIC will make and keep a "record" of the registration. Examples are ss 601EB and 118, although it is to be noted that reg 9.1.01 assumes that there is, in each of these cases, a register as such. In the latter case, certain subsections of s 1274 are declared to apply to the record "as if it were a document lodged with ASIC": see s 118(2). Other provisions contemplate no more than lodgment of documents and, while, as already noted, s 1274(8) says that ASIC may "refuse to register or receive" a document "submitted for lodgment", it does not follow from that provision that every document "submitted for lodgment" in relation to which that power is not exercised is both "received" and "registered". Only those which, under some particular provision, are to be "registered" will be "registered" in consequence of lodgment. Others will be merely "received".
At [26], his Honour pointed out that a Form 519 was to be lodged. His Honour stated:
The requirement in relation to Form 519 is, as already noted, that it be "lodged": see ss 465A(a) and 470(1)(a). No provision of the Act appears to contemplate or require that the information notified by means of lodgement of a completed Form 519 will be extracted from the form and entered in a "register". Nor does there appear to be any provision causing a lodged Form 519 to be, by virtue of or in consequence of its lodgement, itself "registered" or incorporated into or added to a "register". If, as no doubt routinely happens, ASIC makes an image of the form and includes that in the "national database" (a thing mentioned in ss 601PA(3)(a), 601PB(2)(c) and 1274B(2) but, since the amendment of s 1274B(1) by Item 406 of Sch 2 to the Company Law Review Act 1998 (Cth), apparently no longer defined), there is not thereby inclusion of the content of the form in any "register kept by ASIC under this Act".
His Honour continued (at [27]):
In the OneSteel case, there was an implicit assumption by the court that there existed some "register" separate and distinct from the lodged Forms 519 and any reproductions or images made by ASIC of the content of the lodged Forms 519. It was that apparent assumption that caused Finkelstein J to refer to reformation of such a register "by the removal of an entry". As I read the legislation, the true position remains, in relevant respects, as described by Ambrose J in Voxson. I do not accept the point of distinction relied upon by Finkelstein J in OneSteel (see 22 ). In the case of a Form 519 and its content, any concept of "removal of an entry" really entails destruction of the document and elimination of stored images of its content. This is because the document itself and stored images of its content represent the only relevant record maintained by ASIC. In those circumstances, I, like Ambrose J, am unpersuaded that it is open to the court to exercise the s 1322(4)(b) power. That power is exercisable only in relation to a "register kept by ASIC under this Act". Here, there is not identifiable from the Act itself any relevant "register" as such; nor is there evidence of the existence of a register in which the particulars in question are entered. The court's power under s 1322(4)(b) does not extend in such a way to enable it to require that documents - whether paper, electronic or other - be destroyed. ASIC itself has power to destroy and dispose of documents under s 1274(10). The court plays no part in the destruction process.
His Honour thus concluded that there was no "relevant register". But his Honour went on to consider whether the removal of records would involve "rectification" in the relevant sense. After discussing the concept of "rectification", especially as applied to the register of members of a company, his Honour said (at [36]):
These cases emphasise that publicly available registers and records of the kind typically kept by a registrar or similar official under companies legislation are creations of statute and that the content of those registers and records is entirely a statutory matter. Provisions with respect to the rectification or correction of registers and records exist to ensure that they are kept as the statute requires them to be kept.
His Honour then addressed Finkelstein J's point in OneSteel that one meaning of "rectify" is to "reform", and that this contemplated that the Court could direct the expungement of records held by ASIC resulting "from due and faithful adherence to the statutory scheme". His Honour said (at [38]-[39]):
[38] In a case such as the present involving dismissal of a winding up application, it would be necessary, according to the wider reformatory approach, to identify the non-statutory criteria distinguishing cases meriting expungement from those not meriting expungement. The court would, it seems, employ some general notion of fairness in drawing the distinction. In cases where the winding up application was dismissed because the defendant company had succeeded in proving its solvency so as to displace a prima facie presumption of insolvency created by s 459C, one can only assume that the court would be required to make a judgment about the degree of ease or difficulty with which the company had discharged the onus. Cases in which solvency was resoundingly proved would presumably be viewed differently from those in which the probabilities were almost evenly balanced, with references to the former being removed from ASIC records and references to the latter remaining. In cases such as the present where the application was dismissed by consent, the court would presumably have to inquire into the details of the underlying circumstances in a search for some balance of merit grounding some qualitative assessment for the purposes of the general reformatory jurisdiction.
[39] Section 1322(4)(b) does not create any general reformatory jurisdiction. It allows the court to make orders ensuring that the content of registers kept by ASIC under the Corporations Act accords with the statutory requirements with respect to such content. Every decision as to whether such an order should be made will be informed by the statutory requirements regarding register content. If the register does not contain something that the legislation requires it to contain, the jurisdiction to order rectification is enlivened. If the register contains something that the legislation says it must not contain, the jurisdiction to order rectification is also enlivened (also, perhaps, where something not required to be included is included). But if a particular thing is in the register and its presence there represents precise compliance with a requirement imposed by the statute, the jurisdiction to order rectification is not enlivened. Nor is the jurisdiction enlivened if there is absent from the register something that the legislation does not require to be there.
In Westbury Holdings Kiama Pty Ltd v ASIC (2007) 25 ACLC 710; [2007] NSWSC 466, the Court made an order under the Corporations Act, s 601AH(2), reinstating a company which had been deregistered by ASIC following a voluntary winding up. ASIC then reinstated the company to the register. The Court made the reinstatement order without hearing from Miltonbrook Pty Limited which had been party to contractual arrangements with the company and was affected by the order reinstating it. Miltonbrook applied to have the reinstatement order set aside and the re-registration removed. The application came before Barrett J. His Honour refused the order. On the basis of his earlier analysis in Lavercombe v Auscott, his Honour considered that there would be no power to order ASIC to remove the re-registration from the register and therefore there would be no utility in making an order setting aside the re-registration.
On appeal (Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd (2008) 71 NSWLR 262; [2008] NSWCA 38), the leading judgment was given by Spigelman CJ. His Honour referred to what Barrett J said about expunging records from the register by reference to non-statutory criteria. Spigelman CJ pointed out that this reasoning was obiter given "his Honour's previous reasoning, which appears correct to me, that there was no register of any character involved with respect to winding up applications". His Honour pointed out (at [45], [47]):
[45] The line of authority on statutory provisions for rectification of a register of members reflects the general proposition that the scope of a statutory power of this character must be commensurate with the circumstances which call its exercise into existence. This, in turn, is a specific application of the overriding principle of statutory interpretation that words must be construed in their context.
…
[47] "Rectify" is a protean word with a range of meanings: to correct, to remedy, to make right, to abolish. It should be given a scope that encompasses a response to the full range of circumstances that trigger the exercise of the power to rectify. Whether it is to be given a narrow or a wide scope requires attention to the purpose and subject matter of the legislative scheme.
After considering the statutory context, his Honour said (at [56]-[57]):
[56] The power under consideration extends in its terms to the full range of registers kept by the regulator. It may well be that the register of charges kept under s 274 of the Act is not included. This is because of a separate power found in that section to rectify on the basis of a trigger that "a particular … has been omitted or misstated in the register". This may involve the line of authority including Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 and R v Wallis (1949) 78 CLR 529 at 550; cf BP Australia Ltd v Brown supra at [40]-[50].)
[57] Subject to such considerations, it is pertinent to note that the power extends to a range of different registers which perform various functions. Some are primarily designed to give notice to persons who deal with corporations or participants in corporate life or aspects of corporation and securities conduct, sometimes reinforced by certification provisions. Others primarily serve the function of a record. The power to rectify must be given an ambulatory operation which has regard to the different purposes served by different registers.
After referring to the power to register and deregister a company, his Honour said (at [59]-[60]):
[59] The principal purpose of registration is to cause a company to exist as a legal entity and to establish that it is governed and regulated by the Act. A further purpose is to provide information, specified in the regulations, to persons who deal with a company.
[60] In my opinion, the power to rectify the register of companies under s 1322(4)(b) extends to removing a company from the register where the process by which the company was placed on the register was invalid. Where, as is here suggested, that process involved a denial of procedural fairness there would be a relevant invalidity. I do not find it necessary, for reasons discussed below, to treat the alleged non-disclosure as in some way constituting a separate basis to that of procedural fairness.
As this reasoning shows, the actual decision in Miltonbrook involved circumstances where what ASIC was removing and restoring to the register was the company's own registration. Such deregistration and re-registration itself gave rise to legal consequences, namely the non-existence and re-existence of the company as a legal entity. It might have been argued that the reasoning would not necessarily flow on to circumstances where registration was purely a matter of creating publicly available information, with consequences that were at most evidentiary. But that has not been the path of subsequent authority.
MIG Property Services Pty Ltd (2012) 92 ACSR 234; [2012] VSC 606, a decision of Robson J, concerned a winding up order which was made by the Court but which was subsequently appealed, with the order being set aside and the application for winding up adjourned. The debt the subject of a notice of demand was then compromised, and, it seems, the application was dismissed. The sole director and shareholder of MIG sought an order removing all of the notifications which had been lodged with ASIC of what had happened in the winding up proceedings.
Robson J concluded, in the light of Miltonbrook, that the power of the Court to rectify a register extended to directing ASIC to rectify information that had been validly and correctly entered on the register in compliance with law, as well as information which was invalid or incorrect. He accepted that the decision of Finkelstein J in OneSteel had been appropriate in the circumstances of that case.
But Robson J considered that the orders sought should not be made on the facts before him. There was no evidence that the statutory demand did not come to MIG's attention, nor any explanation for why the debt was not paid at an earlier point. Indeed the company should have been in a position to pay the debt. His Honour did not consider that there was anything unjust or unfair about a winding up application having been made against MIG in these circumstances and there was no reason why the record of that application should not stand.
In a subsequent decision, Robson J found that a purported share transfer which was notified to ASIC had not actually taken place. His Honour made a declaration that the shareholding of the company was not affected by the purported transfer and ordered that ASIC "rectify its registers accordingly": Re Botanical Water Holdings Pty Ltd [2013] VSC 96. Black J has adopted Robson J's approach in two other cases where the share transfers were notified to ASIC which were later found to be invalid: Re DJG Equities Pty Ltd (2014) 32 ACLC 14-008; [2014] NSWSC 194; Re Centura Global Holdings Pty Ltd. In Re ABI Australia Holding Pty Ltd [2017] NSWSC 1822 Black J made an order under s 1322(4)(b) "to rectify the register kept by ASIC in respect of" a company to show the initial number of ordinary shares issued to its parent company on incorporation where an incorrect number of shares had been notified to ASIC.
In Demetriou v Gusdote Pty Ltd (2010) 78 ACSR 566; [2010] FCA 581 Cowdroy J made an order that "the registers" kept by ASIC be rectified so as to reflect declarations made by his Honour that certain share transactions, which had been notified to ASIC, were invalid. In Re Macquarie Americas Holdings Pty Ltd [2015] NSWSC 2073 Brereton J made an order requiring ASIC to rectify "the register kept in respect of" the company to correct the details of the ordinary shares issued and allocated on registration of the company, when that figure had been incorrectly notified to ASIC. This is consistent with the approach followed by Robson J and Black J, although in neither case was there any discussion of the authorities.
In none of the authorities which post-date Miltonbrook, however, has an order actually been made for the removal of reference to a winding up application, as is sought in this case. The cases in which orders have actually been made all concerned transactions notified to ASIC which the Court later concluded were invalid, or notifications which were erroneous, in the sense that they did not accurately reflect the actual transaction.
Before proceeding further, it is necessary to say something more about the ASIC database itself. The search of Playup, which was in evidence, described itself as a "current extract" relating to Playup. It bore a note which stated:
This extract contains information derived from the Australian Securities and Investment Commission (ASIC) database under section 1274A of the Corporations Act 2001.
Under the heading "current company officers" Mr Simic's particulars appeared for the "role" of director and also for the "role" as secretary. There then appeared a further "role", namely "petitioner court action", which set out the details of Mr Kay and of his winding up application. The search also contained a list of documents lodged with ASIC which included the Form 519 relating to the application to wind up the company and which was, in accordance with ASIC's usual practice, given a document number. The same document number was shown as the source of the details about the "petitioner court action" entry.
The term "ASIC database" is defined in s 9 as meaning:
… so much of the national companies database kept by ASIC as consists of:
(a) some or all of a register kept by ASIC under this Act; or
(b) information set out in a document lodged under this Act;
but does not include ASIC's document imaging system.
Although the note on the search describes the information as coming from the ASIC database "under" s 1274A, that section does not refer to the ASIC database by name at all. The Act contains no provision expressly directing ASIC to establish or maintain the "ASIC database", or prescribing its content. But the Act does contain a number of provisions which assume the database's existence.
For instance, the Act directs ASIC to record certain action taken by it (such as exercising its power to wind up a company or to initiate its deregistration) in the "ASIC database": ss 489EA(6)(a) and 601AB(3)(a)(iv). Part 2N.4 also provides the statutory basis for ASIC's practice of sending out to each company each year an extract of particulars for correction and return. The relevant provisions (s 348A-348D) refer only to a "return of particulars ... recorded in relation to the company or scheme in a register maintained by ASIC". The provisions do not expressly identify the particulars as those recorded in the ASIC database, although the small business guide in Part 1.5, in providing a summary of the provisions, does state that what ASIC sends out includes details from ASIC's database (see cl 4.2). The heading to s 1274B refers to the "use in court proceedings, of information from ASIC's national database" and that section makes a written extract of information from "the national database" admissible in such proceedings.
It will be recalled that s 1274A(4) permits ASIC to make available "prescribed information" that ASIC has obtained from "a prescribed register". Registers are prescribed for the purpose of s 1274A in the Corporations Regulations, reg 9.1.01. One of the prescribed registers is:
(a) the register of companies registered under section 118 or 601BD of the Act or the registration of which is continued by section 1378 of the Act;
Under reg 9.1.02, the prescribed information for this register is:
(a) in relation to each company registered under section 118 or 601BD of the Act or the registration of which is continued by section 1378 of the Act:
(i) its full name, the date of its registration and its registration number;
(ii) whether it is a public company or a proprietary company;
(iii) whether it is a company limited by shares, a company limited by guarantee, a company limited by both shares and guarantee, an unlimited company or a no liability company;
(iv) its contact address;
(iva) its principal place of business;
(v) its registered office;
(vi) its officers;
(vii) any scheme of arrangement it has entered into with its creditors, its placement under voluntary administration or a deed of company arrangement or receivership or its liquidation;
(viii) its paid-up and unpaid capital;
(ix) its deregistration;
(x) any charges on its property that have been lodged with ASIC or entered in the Australian Register of Company Charges;
Regulation 9.1.02 clearly proceeds on the assumption that the register maintained by ASIC for the purposes of s 118 not only records details of the registration of the company, but also the further particulars which are specified in the regulation. But this is only a regulation and the Act does not itself direct ASIC to keep these details in the register of companies, or in any other statutory register. However the Act does assume that at least some of those particulars will be recorded in the ASIC database, which, under its definition, is to "consist", at least in part, of a "register maintained by ASIC". ASIC's power to maintain registers is not restricted to registers it is expressly required to retain under the Act. Section 1274(1) allows ASIC to retain such registers as it thinks fit. It is an untidy state of affairs, but clearly ASIC does in fact maintain records that contain the particulars in reg 9.1.02 for each company registered under the Act.
In MIG Robson J stated (at [64]):
I infer that the ASIC "database under" s 1274A of the Corporations Act referred to in the ASIC company extract (as quoted above) is in fact the register of companies prescribed under r 9.1.01(a). The prescribed information on that register relating to a registered company includes information of "its liquidation."
I would express the situation as follows. Although it may not have an express statutory obligation to do so, ASIC in fact maintains records including each of the particulars in reg 9.1.02. Those records correspond with the ASIC database or at least with part of the ASIC database. Although they contain more particulars than are required in the register of companies ASIC is required to maintain, they answer the description of a "register" which ASIC is entitled to, and does in fact, maintain under s 1274(1). Those particulars are then rendered "prescribed information" by reg 9.1.02. This formulation differs in its wording from what Robson J said in MIG but not, I think, in its substance.
As Robson J pointed out in MIG, the particulars in reg 9.1.02 include particulars of the "liquidation" of the company, and ASIC in fact maintains in the ASIC database a record of winding up applications which have been made. It follows that, contrary to the view expressed by Barrett J in Lavercombe at [27] (quoted at [26] above), ASIC does maintain a register which includes details of winding up applications, although there is no express statutory obligation to do so. It follows that in a proper case, the Court may direct ASIC to alter the particulars so recorded, just as the Court may direct ASIC to correct shareholding details which are found to have been incorrectly notified.
This conclusion does not necessarily address Form 519 itself, considered as a document a copy of which can be retrieved from ASIC's database. Is this part of a "register" or not?
A typical register in company law is a register which records for each entity in it, information about the entity. There is a distinction between such a register and documents from which the information is extracted and entered in the register. For instance, in the case of a company's register of shareholders, where a shareholder changes his or her address, a letter or other communication will be sent to the company with the new address. The letter itself is not incorporated into the register, and once the information in the letter has been recorded in the register by making the necessary entry, the letter can be discarded. It is not part of the register (in practice, of course, the letter would usually be retained for a period of time for verification purposes).
But this is not the only type of register which may be kept. In a register of documents, an incoming document is "registered" simply by allocating a number or index reference to it and incorporating it into a file or book. The "register" is a file or book of documents so registered. The General Register of Deeds kept pursuant to the Conveyancing Act 1919 (NSW), Part 23, is a register of this type.
The two types of register may co-exist within one system. For instance, the Torrens Title register under the Real Property Act 1900 (NSW) is defined to include both the folios (which contain current details of the land such as the registered proprietor, encumbrances etc) (s 31B(2)(a)) and the registered dealings affecting that land (s 31B(2)(b)).
It might be thought that the definition of the ASIC database (quoted at [42] above) recognises a distinction between information registered by ASIC and copies of documents lodged with ASIC. But there is nothing in the Act which requires a "register" maintained by ASIC to be of one type or another.
I think it is clear that in fact the ASIC database is a hybrid system similar to the Torrens Title register. ASIC does, in effect, register documents which are lodged with it under the Act, by allocating distinctive numbers to those documents and retaining copies of them, so recorded, in a form in which they can be retrieved. The Act itself speaks of this as "registration": see ss 1274(8) and (9), and the heading to s 1275. Arguably, the "register" in fact maintained by ASIC for each company includes not only the particulars in reg 9.1.02, but the documents lodged and recorded against the company as well. Thus, Barrett J may not have been correct in concluding that a Form 519 does not relevantly form part of any "register" for the purpose of s 1322(4)(b).
If a Form 519 were lodged which purported to record that a winding up application had been made against a particular company, and no such application had in fact been made, there would be every reason why the Court should have power to order that the Form be removed from the database. Consistently with the provisions of the Act, it should never have been there in the first place. Especially is this so because, while ASIC may under s 1274(8) refuse to register a document when lodged if it contains errors, etc, its power to destroy documents under s 1274(10) would not permit removal of such a document, once registered, on those grounds (cf Miltonbrook at [56], quoted at [31] above).
It was not necessary for the purposes of these proceedings to reach a final conclusion on this question. For the reasons I have given, the Court has power, at least, to order ASIC to alter or remove particulars of a winding up application recorded by it against a company where no valid application has been made or the particulars recorded are in some other way inaccurate.
But it is a different thing to exercise the Court's power so as to remove reference to a winding up application which has been validly made. In my view, the reasoning of Barrett J on this question in Lavercombe at [38]-[39] is unanswerable. The legislature has decided that the fact of the making of a winding up application is to be recorded by ASIC and made publicly available. A form has been lodged, and an entry has been made in ASIC's database, which reflects that fact. For the Court to order ASIC to remove reference to such an application from its database would be to require it to act contrary to the intention of Parliament. The result would be that the database, by its incompleteness, would be inaccurate.
In the present case, the facts were that a statutory demand was validly served on Playup; Playup did not move to have it set aside; and Mr Kay then, as he was entitled to, commenced winding up proceedings. I cannot see any justification for pretending that these events did not occur. It could hardly be suggested that upon the withdrawal of the winding up application in these proceedings, the Court would order that its file be destroyed, or take steps to prevent a member of the public who attended the hearings from publishing the fact that the proceedings had been brought.
Playup's evidence on this application, of course, only addressed the effect of the notification that the application had been made. With the withdrawal of the application, the fact that it had been withdrawn will now be registered. Playup's case was based on the proposition that this gives rise to some sort of ongoing stain on Playup's corporate reputation. That may, I suppose, be true, but it did not afford a sufficient reason for making the orders which Playup seeks.
Playup's position was that there was never any real question about its solvency and for investors and customers to take the making of the application into account after it has been withdrawn would be irrational. But the scheme of the Act is that it is for prospective investors in, and customers of, Playup to determine the relevance of information about Playup which is collected and made publicly available under the Act. It is not for the Court to restrict that information based on the Court's judgment about its relevance or utility. If Playup's investors or customers are "spooked" by the truthful revelation that Mr Kay made, and later withdrew, a winding up application against Playup, that is not the Court's concern.
In my respectful view, the approach stated by Finkelstein J in OneSteel is too wide. If, as I assume, the evidence in that case demonstrated that the statutory demand had been served, then the winding up application was still validly made, even if it was not received, because of the deemed service provision in the Acts Interpretation Act 1901 (Cth), s 29(1). In considering the decision, it is difficult to put out of mind the fact that the Westpoint group was subsequently exposed as a ponzi scheme and collapsed with huge debts. It would be interesting to know exactly how comprehensive the evidence was about OneSteel's demand not having been received. It would also be interesting to know how it was that OneSteel came to issue its statutory demand in the first place; usually an unpaid supplier does not go to the trouble of issuing a statutory demand unless the debt has been outstanding for some time and conventional methods of collecting it have not been successful. But it is not necessary to decide whether there is power to remove reference to a winding up application from ASIC's database where the statutory demand on which the application is based, although technically served, was not received. It is enough to say that the circumstances of this case are quite different.
Having regard to my conclusions under section 1322(4)(b) it is not necessary to consider the Court's power under s 467(1)(c). If the Court's power under that section extended so far, then for the reasons I have given I would not have exercised it. I would only observe in passing that it would be surprising, if the Court's power under s 1322(4)(b) were not extensive enough to permit rectification of the ASIC database, that the Court's incidental power under s 467(1)(c) should be wider.
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Amendments
25 October 2018 - Corrected formatting issues.
25 October 2018 - Catchwords - changed s 1332 to s 1322.
Paragraph [11] - changed s 1322(4)(d) to s 1322(4)(b).
Paragraph [54] - changed s 31B(a) to s 31B(2)(a) and changed s 31B(b) to s 31B(2)(b).
Paragraph [64] - changed s 1322(4)(d) to s 1322(4)(b).
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Decision last updated: 25 October 2018