Thakran v TD TD Pty Ltd

1. The Fourth Defendant (ASIC) reinstate the registration of the Third Defendant pursuant to s 601AH(2) of the Corporations Act 2001 (Cth).
2. Immediately upon re-registration, the Third Defendant be wound up under the Corporations Act 2001 (Cth).
3. Glenn Livingtsone and Phil Quinlan of Level 25, One International Towers, 100 Barangaroo Avenue, Sydney in the State of New South Wales, registered liquidators, be appointed as liquidators of the Third Defendant Corporation.
4. The intervener, Natalie Sharma, pay the plaintiff's costs insofar as they relate to the application to reinstate the registration of the Third Defendant.
5. The Plaintiff's costs, insofar as they relate to the application to wind up the Third Defendant, be taxed and reimbursed out of the property of the Third Defendant in accordance with s 466(2) of the Corporations Act 2001 (Cth).
6. The Plaintiff provide a copy of these orders to ASIC within 24 hours. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

JAGOT J: 1 This is an application to reinstate a deregistered company, the third defendant, known as KNCR, which, prior to deregistration, had been served with a statutory demand and was taken to have failed to comply with that statutory demand. The application seeks reinstatement of the company under s 601AH(2) of the Corporations Act 2001 (Cth), and, immediately upon reregistration, the winding up of the company pursuant to ss 459A and 459P of the Act, being a winding up in insolvency, and ancillary orders for the appointment of liquidators. 2 The application is opposed by a former director of the company, Ms Sharma, who has served an affidavit the effect of which is to state in fairly loose and general terms that the company owns no assets and has not traded for over one year and that the plaintiff has taken proceedings against her husband as the guarantor of the various companies' debts in the Supreme Court of New South Wales and obtained summary judgment. In Ms Sharma's view, if the company is reregistered, she will be required to satisfy questions of a liquidator in circumstances where the company is without assets and has not been carrying on as a business, which she describes as an unreasonable imposition on her. 3 Ms Sharma also believes that the action is being brought to put financial pressure on her and her husband. She ends her affidavit noting that, to the best of her knowledge, the plaintiff has not sought any information from the company or her to determine the utility of the proceedings. 4 Ms Sharma's affidavit, as I have said, is vague and general and certainly does not provide a sound basis for inferring that there is no utility in the reinstatement of this company for the purposes of it being wound up and for liquidators to be appointed. The requirements for reinstatement, in my view, are clearly satisfied. There is nothing in Ms Sharma's affidavit which suggests that the plaintiff is other than a person aggrieved, having a genuine grievance that the dissolution of the company has affected his interest, in that a right of some value or potential value has gone out of existence. In this case, the statutory demand was served, and the company was taken to have failed to comply with the statutory demand for a sum of approximately US$1.5 million before the company was deregistered. The vague evidence from Ms Sharma as to the company having no assets is insufficient to draw any such inference on her behalf. 5 Furthermore, there is no evidence to support any suggestion that what will be required of Ms Sharma as a former director of the company after it is reinstated and has been wound up would amount to any form of unreasonable imposition. Nor can it be inferred that the action is being brought for any kind of improper purpose of placing pressure on Ms Sharma and her husband. The debt is due and owing by the various companies guaranteed by her husband, and thus far, on the evidence, there has been no recovery of the moneys alleged to be due and owing. 6 Consistent with this, the plaintiff's submissions, which I accept, point out that the concept of a person aggrieved is one of wide import and is to be construed liberally. It has been held that a person who has served an unsatisfied statutory demand and who thereby became entitled, before deregistration, to pursue an application for a winding-up order is a person aggrieved: Partners in Enterprise Pty Limited v Sampson [2002] NSWSC 383 at [7] per Barrett J. 7 As to the question whether it is just that the order for reinstatement be made, various circumstances have been said to be relevant, including the circumstances in which the company came to be deregistered, whether good use could be made of the order if granted, whether any person is likely to be prejudiced by the reinstatement, and the public interest: Australian Competition & Consumer Commission v Australian Securities & Investments Commission [2000] NSWSC 316; (2000) 174 ALR 688 at [27] and [28] per Austin J. 8 I accept the submissions for the plaintiff that in this case the deregistration occurred at the instigation of ASIC and not at the instigation of directors, and there is evidence in the proceeding that ASIC has advised that it does not oppose the reinstatement of the company's registration subject to some conditions which will be satisfied. 9 In terms of the utility of the order, as noted, reinstatement is sought in order to have the company wound up in insolvency in circumstances where the plaintiff is a creditor of the company pursuant to an unsatisfied statutory demand, and the winding up and the appointment of a liquidator will enable investigations to be carried out to determine whether there are assets of the company which may satisfy the statutory demand in whole or part. The evidence of Ms Sharma about the company having no assets, as I have said, is too vague to be accepted. 10 Further, this is not a case in common with In the Matter of Likehart Pty Ltd (deregistered) [2017] NSWSC 906, where the liquidator was without funds to conduct any inquiries so that the reinstatement would be pointless. In the present case the plaintiff has given evidence that he is willing to fund the liquidator's investigations of the company and of the first and second defendants up to a specified sum. Therefore, utility is established. In terms of persons likely to be prejudiced by the reinstatement, the first factor to note is that Ms Sharma will not be required to exercise the functions of a director if the company is wound up. The fact that she may and probably will be required to answer questions of the liquidators is not sufficient prejudice of any relevant kind to make this factor weigh against the reinstatement of the company. The public interest in reinstating the company so that it may be subject to the statutory regime embodied in the winding up provisions also weighs in favour of the making of the order sought. 11 Accordingly, pursuant to s 601AH(2) of the Act, I am satisfied that it is just that the registration of the company be reinstated. As I have said, an order is also sought for the immediate winding up of the company. Given the failure to comply with the statutory demand, there is a presumption of insolvency which operates against the company pursuant to s 459C(2)(a) of the Act, and no evidence exists capable of rebutting that presumption. Ms Sharma has indicated that she does not oppose the winding up order. The evidence satisfies the procedural requirements which are preconditions to the making of a winding up order, including the service of relevant documents, the lodgement of the relevant forms, notice of the application being published, and the filing of the consent to act as liquidators. In these circumstances, I am satisfied that the winding up order also ought to be made. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.