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[2015] FCA 1387
Federal Court of Australia
2015-12-02
Yates J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The plaintiff seeks an order under s 175 of the Corporations Act 2001 (Cth) (the Act) for correction of the defendant's register of members and an order under s 461 that the defendant be wound up, in the following circumstances.
Background 2 The plaintiff is the trustee of the bankrupt estate of Ishak Cicek. The sequestration order was made on 18 June 2015. At that time, Mr Cicek was the owner of one of two shares in the issued capital of the defendant, Icicek Holdings Pty Limited. The other share was owned by Ulker Basak Tili Cicek who, on the available evidence, appears to be or to have been Mr Cicek's wife. Mr Cicek was the defendant's only director. He was also its secretary. There are no other office holders. Upon his bankruptcy, Mr Cicek was automatically disqualified from managing a corporation: s 206B(3) of the Act. 3 Mr Cicek's share in the defendant has vested in the plaintiff by virtue of s 58(1)(a) of the Bankruptcy Act 1966 (Cth). However, the plaintiff is not presently registered in the defendant's register of members as the holder of that share. The plaintiff has requested Mr Cicek to execute an appropriate share transfer in the plaintiff's favour, as well as the appropriate form for lodgement with the Australian Securities and Investments Commission recording the change in shareholding, but this request seems to have been ignored. 4 Section 175 of the Act provides: 175 Correction of registers (1) A company or registered scheme or a person aggrieved may apply to the Court to have a register kept by the company or scheme under this Part corrected. (2) If the Court orders the company or scheme to correct the register, it may also order the company or scheme to compensate a party to the application for loss or damage suffered. (3) If: (a) the Court orders a company or scheme to correct its register of members; and (b) the company or scheme has lodged a list of its members with ASIC; the company or scheme must lodge notice of the correction with ASIC. Note: A proprietary company may also have to notify certain particulars under Part 2C.2 of this Chapter. 5 At the present time, the plaintiff has the following rights provided by s 1072C(1) and (2) of the Act: (1) If: (a) because of the Bankruptcy Act 1966, a share in a company, being part of the property of a bankrupt, vests in the trustee of the bankrupt's estate; and (b) the bankrupt is the registered holder of that share; this section applies whether or not the trustee has been registered as the holder of the share. (2) On producing such information as the company's directors properly require, the trustee is entitled to: (a) the same dividends and other benefits; and (b) the same rights, for example, but without limitation, rights in relation to: (i) meetings of the company; or (ii) documents, including notices of such meetings; or (iii) voting; or (iv) inspection of the company's records; as the bankrupt would be entitled to if he or she were not a bankrupt. 6 One obvious difficulty with the operation of s 1072C(2) in the present case is that there are no directors of the defendant to whom the plaintiff can produce the relevant information. 7 The plaintiff seeks the winding up of the defendant on the just and equitable ground: s 461(1)(k) of the Act. This is based, principally, on the fact that Mr Cicek is disqualified from managing corporations and that no other person has been appointed to act as a director of the defendant. As a consequence, the defendant is effectively a rudderless ship. 8 In order to have standing to seek the winding up of the defendant, the plaintiff must show that he is a contributory of the defendant: s 462(2)(c) of the Act. A "contributory" includes the holder of fully-paid shares in the defendant: s 9 of the Act. Although Mr Cicek's share has vested in the plaintiff, the plaintiff is not, presently, the holder of that share. It is necessary for him to be registered in the defendant's register of members: Taylor (Trustee), in the matter of Kwok v Goldana Investments Pty Limited (receivers and managers appointed) (No 2) [2015] FCA 947 (Taylor). 9 There are other matters relevant to the application to wind up the defendant. The defendant is the registered owner of Lot 10 in Strata Plan 35751, known as Unit 10, 743-745 The Horsley Drive, Smithfield (the Smithfield property). Its only apparent activity is to hold the Smithfield property. The Smithfield property has been sold at auction by a mortgagee in possession for the price of $886,000 plus GST. Completion of the sale is to take place on 7 December 2015. It is anticipated that, after payment of the secured debt, commissions, costs and disbursements, a balance of approximately $300,000 will be available. The plaintiff expects that the balance of funds due on completion will become available for distribution to the defendant's members in proportion to their respective shareholdings, namely 50% each or, on present indications, approximately $150,000 each. 10 Given the impending completion of the sale, the plaintiff approached the Court on 27 November 2015 for orders providing for the abridged service of the originating process. On that day, Foster J, as Commercial and Corporations Duty Judge, made orders abridging time for service on the defendant to 12.00 noon on 30 November 2015. The matter was then adjourned to 2 December 2015 and placed in my list. 11 When the matter was called before me on 2 December 2015, there was no appearance by the defendant, although, on the evidence, it had been served in accordance with s 109X(1)(a) of the Act on 28 November 2015. 12 The plaintiff has endeavoured to serve Ms Cicek with the originating process and other relevant documents. Despite numerous attempts to determine Ms Cicek's whereabouts, including by inquiries made to Mr Cicek, the best available information is that she is currently somewhere in Turkey. It is not known when, or indeed if, she will return to Australia. 13 The hearing of the winding up application has been advertised on the Australian Securities and Investments Commission Insolvency Notices website, although the relevant advertisement was only published on 1 December 2015. In the particular circumstances of this case, I will waive compliance with r 5.6(2) of the Federal Court (Corporations) Rules 2000 (Cth).
Consideration 14 I am satisfied that it is appropriate to order, pursuant to s 175 of the Act, that the defendant's register of members be corrected to record that the share presently registered in the name of Ishak Cicek be registered in the plaintiff's name as trustee of Mr Cicek's bankrupt estate. Such order should take effect from 18 June 2015, the date when the sequestration order was made. The plaintiff is plainly a "person aggrieved" for the purposes of s 175(1) and his interest in the share should be recorded. 15 I am also satisfied that it is appropriate to order that the defendant be wound up pursuant to s 461(1)(k) of the Act. It has no director and, on the evidence, this position appears to have continued since 18 June 2015 when Mr Cicek's automatic disqualification took effect. It is important that, in light of the pending completion of the sale of the Smithfield property, the defendant be put in the hands of someone who can manage its affairs appropriately on receipt of the balance of proceeds of the sale, especially when the defendant's only apparent activity is the holding of that property. The defendant should not be left in its current state of corporate paralysis. The effect of making the order pursuant to s 175(1) of the Act will be that the plaintiff will now have sufficient standing to seek the winding up order: Francis v Blue Ribbon Enterprises (NSW) Pty Ltd (2009) 76 ACSR 13; [2009] FCA 1364 and Taylor at [19]-[20]. 16 Mark Robinson and Daniel Walley of PPB Advisory have consented to act as joint and several liquidators. I note that the plaintiff is a partner of PPB Advisory. Messrs Robinson and Walley have nevertheless declared that they are not aware of any conflict of interest or duty that would make it improper for them to act as joint and several liquidators of the defendant. I should add that nothing has been brought to my attention that would indicate, at least at the present time, that their appointment would be inappropriate because of their professional relationship with the plaintiff. 17 In these circumstances, I am prepared to appoint Messrs Robinson and Walley as joint and several liquidators. Although it is perhaps not necessary for me to say so, it will be necessary for them to be vigilant as to any change in circumstances which might call into question the appropriateness of that appointment. If such circumstances eventuate, I would expect them to immediately approach the Court for appropriate directions or other relief as may be necessary. 18 The plaintiff has provided a bill of costs. I am satisfied that costs should be awarded in the sum claimed.
Disposition 19 Orders will be made accordingly. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.
Scott (Trustee)
Icicek Holdings Pty Limited, in the matter of Icicek Holdings Pty Limited