Shaw v Goodsmith Industries

• 3 - IN THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION

1 The plaintiff seeks an order for the reinstatement of the registration of Goodsmith Industries Pty Limited (formerly Newbold General Refractories Limited). He does so in circumstances where he wishes to pursue proceedings against that company in the Dust Diseases Tribunal. 2 The plaintiff was an employee of the company between 1955 and 1967 and is now suffering from a serious illness, claimed to have been contracted in the course of that employment. His life expectancy is short. The claim he wishes to pursue will come before the Tribunal today. There is evidence that the company was at material times insured against risks of the relevant kind and I am informed that the insurer accepts, in a practical sense, the role of defendant before the Tribunal. The need the plaintiff faces is a need to have his employer formally before the Tribunal in what might be described as a nominal capacity. 3 There is in evidence a historical company extract provided by ASIC in respect of the company. It shows that the company was incorporated in New South Wales in 1920, which must mean that its existence as a legal entity was created by the Companies Act 1899. The extract also shows that the company was deregistered on 13 December 1990, that is, while the Companies (New South Wales) Code was in force. I infer from the extract that deregistration was effected pursuant to s 459 of that Code. 4 The first matter to be explored here is the question of jurisdiction - in short, whether the court has jurisdiction to reinstate such a registration. When the matter came before me on Friday, Mr Giurtalis, who appeared on that occasion for the plaintiff, submitted that jurisdiction could still be exercised under the reinstatement provisions of the Companies (New South Wales) Code. He referred me to the decision of McLelland J in National Australia Bank Ltd v Australian Securities Commission (1991) 5 ACSR 453. Upon examining the matter briefly, I thought that that course might be available but that, if it were taken, there would be problems with the second element of the relief the plaintiff seeks, namely, an order for the winding up of the reinstated company. In the result, I directed that the matter be stood over to today so that further submissions might be prepared. 5 Mr Braham of counsel has today appeared for the plaintiff. He has identified as the source of appropriate jurisdiction s.1362CH of the Corporations Law of New South Wales: "ASIC's powers under section 601AH extend to the reinstatment of the registration of a body corporate that: (a) was at some time before commencement incorporated or taken to be incorporated under a previous law of this jurisdiction corresponding to Chapter 2 of the old law; and (b) was deregistered before commencement. Section 601AH applies to the reinstatement with any modifications that the circumstances require."

"Commencement" here refers to commencement of the Corporations Law on 1 January 1991. The company the subject of this application is within this description. 6 Section 1362CH is continued in force by operation of s.1408(1) of the Corporations Act 2001: "Subject to subsection (3), this Act has the same effect, after the commencement, as it would have if: (a) the transitional provisions (see subsections (6) and (7) of the old Corporations Laws of the States and Territories in this jurisdiction (as in force from time to time before the commencement) had been part of this Act; and (b) those transitional provisions produced the same results or effects (to the greatest extent possible) for the purposes of this Act as they produced for the purposes of those old Corporations Laws." 7 Sub-section (3) of s.1408 allows regulations to adjust the effects produced by sub-s.(1) but no relevant regulations are in force. Sub-s.(6) identifies the provisions of the Corporations Law which are "transitional provisions" for the purposes of sub-s. (1), while sub-s.(7), which also enables adjustment by regulation, may likewise be ignored in the absence of relevant regulations. Among the elements of the Corporations Law identified by s.1408(6) as "transitional provisions" for the purposes of s.1408(1) is "Chapter 11, other than section 1416". Section 1362CH of the Corporations Law of New South Wales appears in its Chapter 11 and is therefore a provision identified by s.1408(6). 8 The effect of s.1408(1) of the Corporations Act 2001 is therefore to cause s.1362CH of the Corporations Law to have, in the context of the Corporations Act itself, the force and effect as it had while the Corporations Law was in force generally such force and effect being the same as if created by the Corporations Act. Section 1362CH can therefore be used today in the same way as it could be used before the advent of the Corporations Act, but so that the results are recognised as results produced by the Corporations Act rather than the Corporations Law. It thus represents an appropriate source of jurisdiction in the present case. 9 Section 1362CH is a provision about ASIC's powers. It says that the powers of ASIC under s.601AH extend to the reinstatement of the registration of a class of bodies that includes the company the subject of the present application. Nothing explicit is said about continuation of the jurisdiction of the court under s.601AH but it seems to me to be clear that preservation of that jurisdiction is implied. 10 The view I have just expressed proceeds from recognition that the power to reinstate, like the power to register in the first place, is a power confided exclusively to ASIC. Only ASIC has the capacity to register or to reinstate. In some instances, the power will be exercised as a result of ASIC's own decision that all necessary steps have been taken to warrant exercise of the power. In other cases, ASIC will exercise its power because of some more direct legal requirement to exercise it, such as a court order. But whether there is a court order or not, the conclusive step can only ever be taken by ASIC which, in taking that step, is never a free agent and must conform to the applicable legal constraints. Whenever it takes the step, it exercises a power. 11 It follows from this that I regard as preserved and continued by s.1362CH not only so much of s.601AH as contemplates action by ASIC according to its own decision independently made (that is, s.601AH(1)), but also the part of the section which contemplates action by ASIC to reinstate upon order made by the court (s.601AH(2)). When ASIC effects a reinstatement following the making of an order by the court it still exercises a power of reinstatement, albeit in circumstances where it makes no independent decision beyond the decision to comply with the order. Preservation by s.1362CH, in relation to the particular class of bodies, of "ASIC's powers under section 601AH" thus includes preservation of the power to reinstate in the particular situation envisaged by s.601AH(2) and accordingly extends to preserve the elements necessary to the existence and exercise of the power, including the jurisdiction of the court to make orders of the kind upon which exercise of that aspects of ASIC's powers is dependent. 12 I note, in any event, that ASIC has, by letter dated 2 May 2002 to the plaintiff's solicitors, stated that it will not oppose the application sought in this case if conditions are satisfied, including a condition that the orders sought be: "couched in terms of section 601AH(2) of the Corporations Act, requiring ASIC to rinstate the registration of the company."

It may thus be inferred that ASIC is willing to exercise the power of reinstatement in relation to this company if the conditions envisaged by s.601AH(2) are satisfied. 13 As to the merits of the application, I am satisfied that it is just that the company concerned be revived for the limited purpose of playing the particular and confined role in the Dust Diseases Tribunal proceedings desired by the plaintiff. A person in the plaintiff's position should not be deprived of the opportunity to make, indirectly, a claim upon the relevant insurance by the absence from the proceedings of a party whose nominal participation is necessary to enable the plaintiff to pursue that claim. At the same time, however, it would be wrong, in case such as this, to expect directors and officers whose tenure came to an end more than eleven years ago to be expected to go back into any position of stewardship. This is not a case in which the reinstatement should be effected in such a way as to re-launch the company into commercial life. Neither the directors nor the shareholders have made any application to allow that to happen. Particularly in light of the single and limited purpose involved, reinstatement will be appropriate only if the company is immediately placed in the hands of a liquidator. 14 The plaintiff in fact seeks a winding up order in the event that the order for reinstatement is made. The fact that, by virtue of s.1408(1), the reinstatement will be effected under the Corporations Act 2001 means that the company will properly be regarded as "registered under this Act", so that it comes within the s.9 definition of "company" and therefore within the description at the start of s.461(1). The plaintiff's standing to apply for a winding up order derives from s.462(2)(b), he being a contingent or prospective creditor. The circumstances of this case - namely, that the directors and officers, as well as the shareholders, whoever they may be (the company extract does not identify them), have been out of touch since December 1990 - may be taken to be such that the company should be regarded as practically unable to operate under the normal kind of administration so that it is just and equitable, in terms of s.461(1)(k) that it be wound up immediately. Should any of the shareholders come to think that the former administration should again become operative and that the company has become viable, they may seek the assistance of the court through s.482 by way of order terminating the winding up. 15 The decisions of Young J in Scott v Janniki Pty Ltd (1994) 14 ACSR 334 and McLelland CJ in Eq in Re Sparad Ltd (1993) 12 ACSR 12 show that, in cases such as this where winding up should follow immediately upon reinstatement, there is no need for formalities of advertising and the like to be undertaken. I am therefore prepared to dispense with them. The plaintiff has tendered the consent of a registered liquidator to act as liquidator in this case. 16 The principal orders the plaintiff seeks are as follows: "1. The Australian Securities and Investments Commission reinstate the registration of the company. 2. The company be wound up pursuant to s.461(1)(k) of the Corporations Act and that Richard James Porter of Priestly & Morris, Level 6, 460 Church St, Parramatta NSW 2150 be appointed liquidator of the defendant company. 3. The plaintiff has leave to commence and proceed with the Dust Diseases Tribunal of New South Wales proceedings number 149 of 2002 at Sydney against the company. 4. No action be taken to enforce any judgment against the defendant other than to obtain the proceeds of any insurance policy indemnifying the defendant against the plaintiff's claim, without leave of the Court. 5. The costs of this application be costs in the proceedings in the Dust Diseases Tribunal of New South Wales." 17 For the reasons I have given, it is appropriate that these orders be made, together with the ancillary orders sought. I therefore make orders in terms of the form of order which has been handed up, as amended and initialled by me, which I now sign and date for identification. 18 The orders may be taken out forthwith.

Last Modified: 05/10/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.