Kyne v CIMIC Group Limited

1. Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission reinstate the registration of Leighton Superannuation Pty Limited (ACN 001 002 035).
2. Costs of the interlocutory application filed on 13 August 2020 be costs in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

KATZMANN J: 1 On 3 July 2020 Thomas Edward Kyne instituted proceedings in this Court seeking damages or equitable compensation from CIMIC Group Limited and Leighton Superannuation Pty Limited in its former capacity as trustee of the Leighton Superannuation Fund (together "the respondents"). Mr Kyne alleges that he was formerly employed by Leighton Contractors Pty Ltd (now known as CPB Contractors Pty Ltd), a wholly owned subsidiary of Leighton Holdings Limited, now known as CIMIC, and a member of the Fund. Leighton Superannuation has since been deregistered. 2 No defence has been filed. 3 In his statement of claim Mr Kyne alleges that, by a letter dated 17 September 1993, the respondents invited him to transfer from the defined benefits section of the Fund to a new accumulated benefits section. The letter enclosed a number of documents. One of those documents compared the benefits of the two sections. According to the pleading, it included a guarantee that, in the event that Mr Kyne transferred from the defined to the accumulated benefits section, any benefit payable to him on retrenchment would "not be less than that which would have been payable under the defined benefits section of the Fund". In reliance on that guarantee Mr Kyne says that he elected to transfer his membership from the defined benefits section to the accumulated benefits section and the respondents treated the election as effective from 1 July 1993. 4 Mr Kyne alleges that he was retrenched on 7 July 2014 but that the respondents failed to pay him his entitlements as a member of the Fund and failed to honour the guarantee. He contends that the respondents have thereby breached their contractual obligations and Leighton Superannuation, its duty as a trustee to adhere to the terms of the trust and that the respondents are estopped from refusing to pay him his entitlements under the guarantee. He also contends that the respondents are liable to him in tort for negligent misstatement or negligence and that they have also engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA) or unconscionable conduct within the meaning of that term in the Australian Securities and Investments Commission Act 2001 (Cth), the TPA and the Australian Consumer Law contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth). 5 On 13 August 2020 Mr Kyne filed an interlocutory application seeking an order under s 601AH(2) of the Corporations Act 2001 (Cth) to reinstate the registration of Leighton Superannuation. The application was supported by an affidavit of Aron Neilson, a lawyer, affirmed the same day. A second affidavit from Mr Neilson was filed on 11 September 2020. The two affidavits contain the entirety of the evidence on which Mr Kyne relies. By consent, an order was made that the application be determined on the papers. 6 The evidence establishes the following matters. 7 Leighton Holdings changed its name to CIMIC on 21 April 2015. Mr Kyne became a member of the Fund on or about 22 January 1985 when Leighton Superannuation was the trustee. It also discloses that Leighton Superannuation was voluntarily deregistered under s 601AA of the Corporations Act on or about 23 February 2012, reinstated pursuant to an order made by the Court on 23 October 2013 (see James v Leighton Holdings Limited [2013] FCA 1115), but within two years, on 12 August 2015, it was voluntarily deregistered a second time and is still deregistered. At the time of its most recent application for voluntary deregistration, the company secretary of the Leighton Group declared that Leighton Superannuation had no outstanding liabilities, had paid all fees and penalties under the Corporations Act, and was not a party to any legal proceedings. 8 Mr Neilson is unaware of the insurance position of Leighton Superannuation at the time of deregistration. 9 On 10 July 2020 Mr Neilson wrote to the last office holder of Leighton Superannuation, Malcolm Ashcroft, notifying him of his intention to file the interlocutory application, enclosing a draft of the application and other documents, including a copy of the originating application and the statement of claim. Mr Ashcroft did not reply. On 27 July 2020 Mr Neilson notified the Australian Securities and Investments Commission (ASIC) of Mr Kyne's intention to seek reinstatement of the registration. ASIC has since advised that it does not oppose the application. Although it initially indicated it would do so on certain conditions, those conditions are either satisfied or no longer pressed. On 27 August 2020 Christine Wong of Herbert Smith Freehills, which acts for CIMIC, informed the Court that CMIC did not oppose the application and, if an order for reinstatement was made, CIMIC "as the sole member and parent company of [Leighton Superannuation] will appoint new officeholder/s immediately upon being notified of the reregistration by ASIC". 10 Section 601AH(2) gives the Court the power to make an order that ASIC reinstate the registration of a company if an application for reinstatement is made to the Court by a person aggrieved by the deregistration and the Court is satisfied that it is just to do so. If such an order is made, the Court may validate anything done between the deregistration of the company and its reinstatement and make any other order it considers appropriate: s 601AH(3). 11 As Gordon J explained in Wedgewood Hallam Pty Ltd v Australian Securities and Investments Commission, in the matter of Combined Building Consultants Pty Ltd [2011] FCA 439 at [3], the reinstatement of a company has the following consequences. 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 ASIC re-vests 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. 12 Two questions arise for consideration: first, is Mr Kyne "a person aggrieved by the deregistration" and second, is it just to reinstate Leighton Superannuation. The answer to both questions is yes. 13 Mr Kyne "has a genuine grievance that the dissolution of the company affected his … interests because … a right of some value or potential value has gone out of existence": Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd [2010] NSWSC 1369; 80 ACSR 670 at [43] (Barrett J). That right is the right to sue Leighton Superannuation. The fact that the company has been dissolved means that Mr Kyne can no longer pursue his action against the company. That is enough to make him a person aggrieved by the deregistration. See Donmastry Pty Ltd v Albarran [2004] NSWSC 632 at [4] (Barrett J). Put simply, Mr Kyne is a person aggrieved because his legal rights have been affected and because he has a genuine grievance that the dissolution has affected his interests: Re Proserpine Pty Ltd [1980] 1 NSWLR 745 (Needham J); Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; 174 ALR 688; 19 ACLC 341; 34 ACSR 232 at [24]-[26] (Austin J). 14 This case is on all fours with James. James also concerned an action by an erstwhile employee of the Leighton Group who had accepted an invitation to transfer from the defined benefits section of the Fund to the accumulated benefits section in reliance on the benefits guarantee. The pleading appears to have been the same and the remedies sought identical. The reasons given by Wigney J for reinstating the company on that occasion apply equally here. I respectfully adopt those reasons. In summary, there are four factors which weigh in favour of reinstatement. 15 First, the company was administratively deregistered by ASIC under s 601AA. 16 Second, the company was not insolvent at the time of deregistration. The evidence here is the same as it was in James. 17 Third, there is no evidence to indicate that any person is likely to be prejudiced by the company's reinstatement. 18 Fourth, it appears from the pleading that there is a serious question to be tried. 19 As Wigney J observed in James at [21], if Leighton Superannuation had an insurance contract which covered its potential liability, that might be a relevant consideration militating against reinstatement. In that case he would have a direct right of action against the insurer. But, as his Honour also observed, the Court will generally not refuse an application for reinstatement where there is uncertainty about the availability of such a claim. 20 In all these circumstances, I am satisfied that it is just that the company's registration be reinstated and I will make the orders Mr Kyne sought in his interlocutory application. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann.