Re Fensford Pty Ltd; Nour Pty Ltd v ASIC [2004] VSC 179

Supreme Court of Victoria|2004-05-26|Before: Balmford J

This matter arises in the context of proceeding number 8031 of 2001 ("the principal proceeding") in which the plaintiff in the present proceeding ("Nour") is the plaintiff, and Fensford Pty Ltd ("Fensford") and the second defendant in the present proceeding ("Mr Vella") are the first and third defendants respectively. In the principal proceeding Nour seeks relief against all three defendants by way of equitable compensation, and an order for the taking of all necessary and proper accounts. These reasons for judgment should be read with the reasons delivered this day in the principal proceeding.

Fensford was deregistered on the initiative of the first defendant ("ASIC") on 15 December 2003 pursuant to section 601AB of the Corporations Act 2001 ("the Act") for failure to lodge annual returns. An application for voluntary deregistration under of the had been lodged on 9 February 2001 by Mr Vella as a director of Fensford but was ineffective. Mr Adkins, for ASIC, indicated that this was because Fensford had not, at that time, paid all fees and penalties payable under the .

This proceeding is an application by originating motion filed on 26 April 2004 under section 601AH(2) of the Act for the reinstatement of the registration of Fensford. The application is not opposed by ASIC.

Section 601AH(2) reads, so far as relevant:

(2) The Court may make an order that ASIC reinstate the registration of a company if:

(a) an application for reinstatement is made to the Court by:

(b) the court is satisfied that it is just that the company's registration be reinstated.

Ms Schoff, for Nour, submitted that her client was aggrieved by the deregistration, which was first notified to Nour in the opening submissions of counsel for the defendants in the principal proceeding. She relied on the affidavit of her instructing solicitor Ms Treleaven, who deposed that in closing submissions in the principal proceeding, counsel for Nour had submitted that the defendants, including Fensford, were liable to account to Nour in the sum of $356,746.09, and that the decision of the Court was reserved. Ms Schoff submitted that if orders were made in the principal proceeding directing Fensford to provide equitable compensation to Nour, those orders would be nugatory and Nour would have no prospect of taking further action to enforce any judgment obtained by Nour against Fensford unless the registration of Fensford was reinstated. In her submission Nour was at the least a contingent creditor of Fensford.

I accept those submissions, and I am satisfied, on that basis, that Nour is a person aggrieved by the deregistration of Fensford in terms of section 601AH(2)(a)(i) of the Act and accordingly is entitled to bring this application. As Barrett J said in Greenfold Holdings Pty Ltd v ACB Human Resources Pty Ltd [2] , a contingent creditor is a "person aggrieved" for the purposes of that provision. His Honour continued:

This is because, with the debtor company no longer in existence and such property as it may have had vested in ASIC, the creditor has no means of pursuing his or her debt or attempting to realise something for it unless the company is brought back into existence with the deemed continuity for which section 601AH(5) provides.

The inventory of assets and liabilities filed in respect of the estate of Julie Vella, which is the second defendant in the principal proceeding, shows that at 22 February 2000 Fensford was owed the sum of $28,841.51 by that estate. Ms Treleaven deposes that no evidence was given at the trial of the principal proceeding that that sum had been repaid. Ms Schoff submitted that, without the services of a liquidator, Nour could not ascertain whether there were any assets of Fensford, and such services would only be available if the registration of Fensford was reinstated.

Mr Mian, for Mr Vella, appeared to oppose the application. He submitted that his client, as a director of Fensford, would be prejudiced by the reinstatement, in that there would be fees and possibly penalties payable. However, there is no evidence before the Court as to that matter. Nor did he produce evidence to support his expression of belief that the moneys owing to Fensford by the estate of Julie Vella had been paid.

Mr Mian further submitted, and Ms Schoff conceded, that it would be premature to make an order reinstating Fensford until delivery of the judgment of the Court in the principal proceeding. If the Court made no order against Fensford, there would be no justification for the reinstatement. On that basis I reserved my decision on the application.

The question before me is whether it is just, in terms of section 601AH(2)(b) that the registration of Fensford be reinstated.

Higgins J said in Newham v ASIC [3] :

The discretion [to reinstate the registration of a company under section 601AH] is in terms unfettered but, as with any like conferral of power, it must be exercised judicially and in conformity with the purposes of the relevant legislation. Two considerations should make a court reluctant to revive a defunct company. The first is that to do so revives obligations and liabilities previously considered to be ended thus prejudicing the right and legitimate expectations of the members and officers of the defunct company. The second is that it must create public confusion to have a company blinking out of and into existence. Reinstatement should be permitted only if an unjust result, not remediable otherwise, would follow.

I note the evidence of Ms Treleaven that the solicitors for Nour notified the solicitors for Mr Vella on 29 January 2001 of their client's intention to issue proceedings against Fensford, and that the unsuccessful application for voluntary deregistration of Fensford was lodged on 9 February 2001.

Having considered the question before me, in the light of the matters to which I have referred, I am satisfied that it is just that the registration of Fensford be reinstated. As Barrett J said, with reference to authority, in Greenfold Holdings [4] :

Reinstatement for the purpose of enabling the company to be subjected to legal processes that it would otherwise escape is an established aspect of the section 601AH jurisdiction.

For the reasons given, I make an order, in the form of the Minutes of Proposed Order submitted by Mr Adkins, that ASIC reinstate the registration of Fensford, that order to incorporate the undertaking by counsel for the plaintiff which she indicated to the Court that she had instructions to give.

Greenfold Holdings Pty Ltd v ACB Human Resources Pty Ltd [2003] NSWSC 1184

Newham v ASIC [2000] ACTSC 77

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