2010/076524 THE OWNERS OF STRATA PLAN 62658 v BLACK NO SUGAR PTY LTD & ANOR
JUDGMENT
1 This is an application under s 601AH(2) of the Corporations Act 2001 (Cth) for orders requiring Australian Securities and Investments Commission to reinstate the registration of two deregistered companies, Black No Sugar Pty Ltd and ACN 088 020 035 Pty Ltd.
2 The former names of these companies are Dalgairns Partnership Pty Ltd and DP Consulting Group Pty Ltd. It may be inferred that "DP" stands for Dalgairns Partnership. I shall refer to the companies as "Dalgairns" and "DP".
3 The application is brought by the owners corporation of the strata scheme affecting the Renzo Piano building in Macquarie Street, Sydney. The owners corporation is the plaintiff in District Court proceedings arising out of flooding in the basement of the building in June 2002 said to have been caused by malfunctioning and faulty design of the hydraulic system. Dalgairns was involved in the design and construction of the hydraulics system.
4 Dalgairns was named as a defendant in the District Court statement of claim filed on 10 June 2008. At that time, however, it had been deregistered and no longer existed. DP was not named as a defendant.
5 Since the District Court proceedings were commenced, the owners corporation has become aware that DP may also have been responsible for the design and installation of the hydraulics system. Indeed, DP may, in the course of the project, have taken over the role originally played by Dalgairns and supplanted Dalgairns.
6 It is apprehended by the owners corporation that both Dalgairns and DP carried insurance relevant to the roles they played. The affidavit of Mr Oldfield of McCulloch & Buggy details the investigations that have been made in that regard. It is fair to say, I think, that no certainty has emerged on the question of insurance, although there is a clear possibility that one or more of several identified policies may respond.
7 It is plain, to my mind, that the conditions under s 601AG necessary to allow the owners corporation to proceed directly against an insurer are not obviously satisfied. If they were, dismissal of the present application might well follow: see Stone v ACN 000 337 940 Pty Ltd [2008] NSWSC 1058; (20008) 68 ACSR 242.
8 Since direct access to an insurer via s 601AG is not obviously available, one might well conclude, first, that the owners corporation is aggrieved by the non-existence of Dalgairns and DP because it is unable to proceed against them for the wrongs it considers them to have done, with consequent inability to argue for the joinder of insurers; and, second, that it is "just" that the registration of each company be reinstated so that the owners corporation may pursue that course.
9 It has been submitted on behalf of a former director and one of the potentially liable insurance companies, however, that the court should not reach that conclusion in this case. The reason put forward is that claims by the owners corporation against both Dalgairns and DP are bound to fail because they are statute barred. The pursuit of the District Court proceedings is therefore said to be futile, so that there is no good reason to bring the companies back to life.
10 If it were shown that District Court proceedings against Dalgairns and DP would with certainly fail, the s 601AH(2) application would not succeed. This is because the owners corporation's inability to sue entities against which no relief is available would cause it not to be a person aggrieved by the deregistration of those entities and their consequent non-existence.
11 It does not follow from what has just been said that, for the s 601AH(2) application to succeed, an applicant in the position of the owners corporation must show that the actions against Dalgairns and DP are bound to succeed. The owners corporation will be relevantly aggrieved if it has a fairly arguable case. If the owners corporation shows itself to be in that position vis-à-vis Dalgairns or DP and thereby to have prospects of accessing any insurance by suing the relevant company, it will be a person aggrieved by the deregistration that makes the companies non-existent and therefore deprives the owners corporation of the ability to seek to make out its case.
12 It is necessary to consider the question of prospects separately in relation to Dalgairns and DP.
13 The argument raised before me against the reinstatement of Dalgairns is that, on any view, the limitation period had expired when the District Court action was commenced. The response of the owners corporation is that Dalgairns appears to have been the designer of the hydraulic system, so that time begins to run when loss accrues upon the relevant defect becoming manifest or otherwise being discovered: Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302; Eko Investments Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 208. On that basis, time would run from the time at which the flooding of June 2002 caused any design flaw to become manifest, with the result that the District Court proceedings commenced against Dalgairns would not have been statute barred, had Dalgairns been in existence; and, of course, reinstatement, if effected, will cause the existence of Dalgairns to be regarded as having continued without interruption: s 601AH(5).
14 There is clearly substance in the position taken by the owners corporation on this aspect.
15 Opposition to the reinstatement of DP is also based on the expiration of the limitation period. The owners corporation's argument in response is somewhat complex.
16 For DP to become a party to the District Court proceedings, an order will have to be made by that court in the future, that is, at a time more than six years after the flooding of June 2002 and the damage that it caused. DP, unlike Dalgairns, was not named as a defendant in the District Court proceedings. It is the contention of the owners corporation, however, that it has a good case to obtain an order under either or both of ss 64 and 65 of the Civil Procedure Act 2005 causing DP to be a party to the District Court action in such a way that it is to be regarded as having been a party since inception.
17 Such an application would be made on the footing that the owners corporation intended to sue (and considered itself to be suing) whichever company it was that provided relevant design and supervisory services in relation to the hydraulic system. The affidavit of Mr Oldfield refers in detail to discovered correspondence suggesting that, in the course of the building project, DP "assumed responsibility for the design of the hydraulic and fire services for the building and for overseeing the installation of these services". Dalgairns and DP might therefore be found ultimately to share any liability.
18 There is here a demonstrated basis on which it could be open to the District Court to make orders under s 64 and s 65 causing DP to be an additional party with retrospective effect. That that course is available under those sections in an appropriate case is borne out by an observation of Campbell JA in Greenwood v Papademetri [2007] NSWCA 221 at [69]:
"In my view, if it was clear that a plaintiff intended to sue the owner of a particular piece of property, and sued A in the belief that A was the owner of the property, but in fact the owners were A and B, there is no reason why an amendment to add B could not count as an amendment 'so as to correct a mistake in the name of a party to the proceedings' ."
19 Here, A and B would be the successive (or perhaps, as to some period, concurrent) designers, rather than co-owners.
20 I am satisfied that the owners corporation has shown that there is prima facie substance to its claim to have DP joined as a party to the District Court action on a basis that would avoid its having a limitation defence. It follows that the owners corporation is aggrieved by the inability to mount that claim with a view to establishing against DP liability to which insurance might reasonably be expected to respond. It also follows that reinstatement of the registration of DP is just.
21 In relation to both Dalgairns and DP, the company's non-existence means that the owners corporation is unable to pursue such rights as it may have to obtain the benefit of insurance protecting those companies in respect of liabilities that they may be shown to owe to the owners corporation and for which action may well be maintainable in the District Court despite the passage of time since the occurrence of June 2002. That coupled with the fact that there is an arguable basis for successful assertion of the rights is, according to decided cases, enough to bring the plaintiff within the "person aggrieved" description for s 601AH purposes: see, for example, Deputy Commissioner of Taxation v Lanstel Pty Ltd (1996) 22 ACSR 314; Greenfold Holdings Pty Ltd v ACB Human Resources Pty Ltd [2003] NSWSC 1184; Re Fensford Pty Ltd [2004] VSC 179.
22 It is then necessary to consider whether it is "just" that the reinstatement be ordered in each case. From the owners corporation's viewpoint, it is "just" that it have the opportunity to seek to access the insurance. Other interests and possible prejudice to those interests must, however, be considered.
23 The interests of persons who were directors of the companies before deregistration may be left to one side. I say this because the owners corporation seeks in relation to each company not only an order for reinstatement of the registration but also an order that the company be immediately wound up and a liquidator be appointed (that being an order commonly made in these cases). That will relieve the former directors of any need to undertake administration of the companies anew. There is also the point that the owners corporation has expressed its willingness to pay the expenses of the winding up.
24 As for the insurer or insurers who may ultimately be found liable to indemnify the reinstated companies for any liability they have towards the owners corporation, it cannot be said that it would not be "just" for them to face the consequences that they would have faced but for the deregistration.
25 I will therefore make the reinstatement and winding up orders as sought.
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