Re Velissaris [2012] VSC 293 (4 July 2012)

Supreme Court of Victoria|2012-07-04|Before: FERGUSON J

CORPORATIONS - Application to reinstate company following deregistration - Company in liquidation immediately prior to deregistration - Purpose of reinstatement said to enable claims to be prosecuted by company - Applications to stay or terminate winding up prior to deregistration refused previously - No evidence of solvency or capacity to fund litigation following reinstatement - Corporations Act 2001 (Cth), s 601AH(2)

2 Mr Velissaris exhibited to his affidavit in support of the application for leave, the form of proposed Originating Process that he wished to file seeking the company's reinstatement and an affidavit in support of that proposed process. Having had the opportunity to consider that material, and given the nature of the substantive application, I determined that it would be more expeditious and preferable to deal with the application for reinstatement on its merits, rather than to consider separately the issue of leave.[1]

3 The application for reinstatement is made under s 601AH(2) of the Corporations Act 2001 (Cth) which provides:

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:

(i) a person aggrieved by the deregistration; or

(ii) a former liquidator of the company; and

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

4 For the purposes of this application, I have assumed (without deciding) that Mr Velissaris is a person aggrieved by the deregistration. That leaves for determination the issue of whether it is just that Maryvell Investments' registration be reinstated.

5 In Australian Competition and Consumer Commission v Australian Securities and Investments Commission,[2] Austin J observed:

The wording of the section is very broad, and the cases confirm that it gives the court a wide discretion. The court takes into account the circumstances in which the company came to be dissolved; whether, if the order were made, good use could be made of it; and whether any person is likely to be prejudiced by the reinstatement: Re Kilkenny Engineering Pty Ltd (in liq) (1976) 1 ACLR 285; Drysdale v Australian Securities Commission (1992) 10 ACLC 1427; Re Steelmaster Pty Ltd (in liq) (1992) 6 ACSR 494.

These matters are only factors to be weighed in the exercise of the Court's discretion. They are not limits on the court's power.

6 One factor that may need to be considered in the exercise of the Court's discretion is whether the reinstatement would be futile. The question of futility has commonly arisen in the context of determining whether the prospective defendant to a claim to be brought if the company's registration is reinstated should be heard on the reinstatement application. In Pilarinos & Ors v Australian Securities and Investments Commission,[3] Gillard J stated:

I think it would be appropriate, also, as a general guideline, that if a judge formed the view on the material that it was proposed to sue the company, and the cause of action was hopeless, it may be appropriate to require notice to be given to the potential litigant. Examples of this would be where there is a clear defence, such as a limitation defence or some statutory defence. However, it would only be in the clearest of clear cases that that should happen. I reiterate that the proper venue for the cause of action to be heard and determined is a court or statutory tribunal. The parties will then have every opportunity to fight the case in a proper setting, to have the advantage of discovery, to test the other party's case, and to properly present their cases.[4]

7 There is a long history of litigation involving Mr Velissaris, Maryvell Investments, its former liquidator and others. In a recent case involving Mr Velissaris, the Full Court of the Federal Court of Australia usefully included a list of many of the cases.[5] For convenience, that list is reproduced in the schedule to these cases.[6] Many of those cases set out in detail the various complaints that have been made by Mr Velissaris.

8 In summary, Mr Velissaris was involved with the Greek Bar Tavern Kalamata and Mediterraneano restaurant which operated from 333335 Sydney Road, Brunswick. Maryvell Investments was the registered proprietor of the property. Mr Velissaris was the sole director and shareholder of the company. Mr Velissaris asserts that:

(a) in about 2002, a truck damaged the front fascia of the property;

(b) in 2003 - 2004, Sigma Constructions Pty Ltd (which had a license from Maryvell Investments to enter the property) caused damage to the property;

(c) Mr Velissaris engaged Tolhurst Druce & Emmerson to sue the truck driver and Sigma for damages but the solicitors mishandled the claims and his family lost everything;

(d) the solicitors pursued Maryvell Investments for costs and successfully applied to wind up the company;

(e) Laurence Fitzgerald was appointed as liquidator of the company;

(f) Mr Fitzgerald wrongly refused to sell the Sydney Road property to Mr Velissaris and instead sold it at an undervalue to his friend's solicitors;

(g) Mr Fitzgerald wrongly sold for $1 the restaurant plant and equipment which Mr Velissaris claims he owned.

9 If Maryvell Investments is reinstated and if Mr Velissaris resumed as director, then he says that the company would pursue claims primarily against Sigma and Tolhurst Druce & Emmerson and other lawyers who acted for the company. A claim was commenced against Sigma in the Victorian Civil and Administrative Tribunal but was apparently not pursued by the liquidator. In addition to these claims, Mr Velissaris says he would seek advice about whether any other claims should be pursued. He states in his affidavit that if the company is reinstated, there should at least be an inquiry into the conduct of the liquidator. In his affidavit, Mr Velissaris also contemplates litigation against the liquidator in relation to the sale of the property and the plant and equipment.

10 All of the complaints that Mr Velissaris makes have been the subject of consideration in this Court and the Federal Court. A claim in relation to the sale of the property was the subject of a hearing before Gordon J in the Federal Court.[7] Her Honour held that the claim had no reasonable prospects of success and dismissed the proceeding. In a later proceeding in this Court, Mr Velissaris applied for orders that the liquidation of Maryvell Investments be stayed or terminated, an inquiry be held into the conduct of the liquidator and damages from the liquidator for breaches of ss 180 and 181 of the Corporations Act. Robson J observed that the Federal Court had already dealt with the allegations that the property was not properly sold by Mr Fitzgerald and that the claim to terminate the liquidation on this ground was hopeless and bound to fail.[8] His Honour also held that Mr Velissaris had not established a prima facie case that would warrant an inquiry into the conduct of the liquidator.[9] In addition, his Honour held that the evidence did not disclose any possible cause of action against the liquidator by the company and that all of Mr Velissaris' complaints against the liquidator were bound to fail.[10] Amongst other things, his Honour refused to terminate the liquidation.

11 Mr Velissaris made a number of further applications to terminate the winding up of Maryvell Investments or for leave to make such an application.[11] In support of these applications, Mr Velissaris relied on one or more of the matters that he relies on in the present proceeding. For example, most recently in the Federal Court, Mr Velissaris sought termination of the winding up so that Maryvell Investments might pursue claims against Sigma, former solicitors of Maryvell Investments, the liquidator of Maryvell in relation to the conduct of the liquidation and sale of the property, the Australian Securities and Investments Commission ("ASIC") and a local council.[12] Mr Velissaris was unsuccessful in each of his applications to terminate the winding up of Maryvell Investments or for leave to bring such an application.

12 In my opinion, it would not be just to reinstate the registration of Maryvell Investments in circumstances where:

(a) multiple unsuccessful applications to terminate the winding up of the company were made prior to its deregistration;

(b) the grounds relied upon in those applications were substantially the same as are relied upon in this proceeding;

(c) the proposed claims that Mr Velissaris would have the company pursue in relation to the conduct of the liquidator and the sale of the property have already been considered in this Court and the Federal Court and have been characterised as having no reasonable prospects of success, being hopeless or doomed to fail - it would be pointless to have the company's registration reinstated for the purpose of bringing such claims;

(d) the company was wound up on the grounds of insolvency yet there is no evidence as to the company's financial position should its registration be reinstated.

13 In reaching this conclusion, I have also taken into account that there has been no final adjudication of the claim against Sigma or the solicitors who acted for the company. I note that the liquidator did not pursue such claims.

14 Although I have determined the application on other grounds, there is one final observation that I would make; that is that the attitude of ASIC to this application for reinstatement is not known. ASIC opposed the most recent application in the Federal Court for termination of the liquidation both at first instance and on appeal.[13] Particularly in light of that, positive evidence that ASIC consented to or did not oppose the application would have been necessary if Mr Velissaris were to be successful.

15 The application for reinstatement of the registration of Maryvell Investments will be dismissed.

SCHEDULE OF CASES INVOLVING MR GEORGE VELISSARIS

Setting aside injunction issued by VCAT restraining Sigma from entering land.

Appeal from order that lease to Mr Velissaris void and unenforceable pursuant to s 588F of the Corporations Act.

Order for possession of land in favour of liquidator.

Application for termination of liquidation of Maryvell, and injunction to restrain sale of property.

Refusal of injunction restraining liquidator from effecting settlement of the property.

Removal of caveat lodged by Mr Velissaris and restraint against lodging further caveat.

Claim against liquidator in relation to manner of sale of property dismissed.

Application to remove caveat lodged contrary to orders of Bongiorno J, with indemnity costs.

Application to stay liquidation and claim against liquidator.

Orders made requiring leave before commencing further proceedings.

Refusal of application for leave to commence proceedings.

Refusal of application to be joined as co-applicant or substituted as applicant.

Refusal of application for leave to commence proceedings.

Claim to recover the value of plant and equipment dismissed.

Application for leave to appeal against decision of Federal Magistrates Court dismissing challenge to bankruptcy notice.

Refusal of application for leave to stay or terminate winding up of company.

[1] In two separate proceedings, orders were made by Robson J and Sifris J requiring leave to be sought before Mr Velissaris be entitled to file certain proceedings or process: Re Maryvell Investments Pty Ltd (in liquidation) [2009] VSC 61 (Robson J) and Velissaris v Dynami Pty Ltd & Zervas [2010] VSC 587 (Sifris J).

[4] Ibid at [29]. See also: Chalker v Clark & Anor [2006] VSC 457 at [34] affirmed on appeal, Chalker v Clark and Australian Securities and Investments Commission & Ors [2008] VSCA 92 at [33]. See also AMP General Insurance Ltd v Victorian Workcover Authority & Ors [2006] VSCA 236; (2006) 15 VR 175.

[5] Velissaris v Fitzgerald [2011] FCAFC 120 at [27].

[6] The list in the schedule includes a reference to the Full Court decision.

[7] Velissaris v Maryvell Investments (in liq) (No 2) [2008] FCA 511.

[8] Re Maryvell Investments Pty Ltd [2009] VSC 61 at [65]- [66].

[11] George Velissaris & Ors v Maryvell Investments Pty Ltd (In Liq) & Ors [2009] VSC 448, Re Maryvell Investments Pty Ltd (In liquidation) [2010] VSC 278, Re Maryvell Investments Pty Ltd (In liquidation)(No 2) [2010] VSC 401, Velissaris v Dynami Pty Ltd [2011] VSC 198, Re George Velissaris in his capacity as the Trustee of Maryvell Family Trust and the contributory of Maryvell Investments Pty Ltd (unreported, Davies J, 8 July 2011), Velissaris v Fitzgerald [2011] FCA 197 (affirmed on appeal, Velissaris v Fitzgerald [2011] FCAFC 120).

[12] Velissaris v Fitzgerald [2011] FCAFC 120 at [15]. I note from the Full Court's reasons for decision that Mr Velissaris sought to tender a number of documents which that court refused to admit as evidence on the appeal (ibid at [41] and [42]). During the course of the hearing in the present case, Mr Velissaris provided to the Court a number of documents that he believed were relevant to his application. Copies of the documents have been marked for identification and placed on the Court file. Some of the documents were the same as those that Mr Velissaris unsuccessfully sought to tender in the Federal Court proceeding. The balance of the documents are of a similar nature. Most relate to claims that have been determined against him in this Court. The documents have no probative value and I would refuse to admit them as evidence.

[13] Velissaris v Fitzgerald [2011] FCA 197 and Velissaris v Fitzgerald [2011] FCAFC 120.

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Cases Cited (2)