Solicitors:
Koffels (Plaintiff/Applicant)
Australian Securities and Investments Commission (First Respondent)
H & H Lawyers (Second Respondent)
File Number(s): 2018/297388 (004)
[2]
Judgment - ex tempore (revised 29 january 2019)
By Interlocutory Process filed on 17 January 2019, Mr Anthony Elkerton, as former liquidator of Ji Woo International Education Centre Pty Ltd (in liq) ("Company") applies, under 601AH(2) of the Corporations Act 2001 (Cth) for the reinstatement of the registration of the Company, and an order that he continue in office as liquidator of the Company as if it had not been deregistered and that all acts undertaken or performed by or on behalf of Mr Elkerton or the Company during the period from 2 January 2019 to the date of the order be validated.
The application is supported by an affidavit to Mr Elkerton sworn 17 January 2019 which sets out the background of the application. Mr Elkerton was appointed as liquidator of the Company on 3 September 2018, in place of the previous liquidator, Mr Baxendale, by an order of the Federal Court of Australia made on that day. It appears that, on 2 January 2019, the company was deregistered by the Australian Securities and Investments Commission ("ASIC"). A member of Mr Elkerton's staff became aware of that deregistration on 14 January 2019 and this application for the Company's reinstatement was filed shortly thereafter. It appears that the deregistration took place because the previous liquidator had, on 2 October 2018, lodged a Form 5603 End of Administration Return, notwithstanding that, obviously enough, the liquidation had not ended, and all that had occurred was that the previous liquidator had been replaced by Mr Elkerton in an ongoing liquidation. The deregistration took place notwithstanding that Mr Elkerton had given notice to ASIC of his appointment as liquidator of the Company, following the orders made by the Federal Court of Australia. The provision on which ASIC relied to deregister the Company, s 509 of the Corporations Act, appears to apply only to a voluntary liquidation and the Company is in a court ordered liquidation. I note, for completeness, that Mr Johnson, who appeared for ASIC, indicated ASIC's position that the section applied more widely in court appointed liquidations, but was unable to identify any reason why that might be so.
Notice of the application has been given to a number of persons who may have interests in the application. The former liquidator, Mr Baxendale, has not opposed the application, and has, by email to the solicitors for Mr Elkerton, drawn attention to the circumstances to which I have referred above. That email notes that Mr Baxendale became aware, after he had lodged the Form 5603, End of Administration Return, of guidance given by the Australian Restructuring Insolvency and Turnaround Association ("ARITA"), on 27 November 2018, that such a return should not be lodged in these circumstances, and also recorded ARITA'S view (with which I have agreed above) that s 509 of the Act does not apply in a winding-up ordered by the Court.
By letter dated 18 January 2019, ASIC indicated that it did not oppose the orders that the Company be reinstated, and that Mr Elkerton be reappointed as liquidator. Mr Johnson confirmed that position today. Mr Smallbone, who appears for Messrs Choi and Lee, Ms Han and IBN Global Pty Ltd, which are presently seeking an extension of time to permit them to set aside liquidators' examinations and orders for production in respect of the affairs of the Company, accepted that ASIC should not have deregistered the Company and that it would be open to the Court to take the view that the Company should be reinstated. He also made a further submission as to the terms of that reinstatement which I will address below.
Mr Baird, who appeared for the liquidator, referred to the circumstances in which the Company had once before been deregistered, and then reinstated by the Federal Court of Australia, in a contested application, for the reasons set out by Gleeson J in her judgment in Yeo v Australian Securities and Investments Commission, in the matter of JI Woo International Education Centre Pty Ltd (dergd) [2017] FCA 1480. Mr Baird submits that the deregistration of the Company was due to an administrative error by ASIC, caused by a misapplication or misunderstanding of s 509 of the Act, which applies, Mr Baird submits, and I have accepted, only to a voluntary winding-up, in conjunction with the lodgement of an incorrect form by the previous liquidator.
Mr Baird referred to my decision in Re Atlas Construction Group Pty Ltd (in liq) (unreported, 13 December 2018) which dealt with a substantially similar situation, where the former liquidator of a company had lodged a form that led ASIC to understand, incorrectly, that a winding-up was complete, and led to the deregistration of the company in circumstances that the winding-up was continuing. Mr Baird submits, and I accept, that the circumstances of this case are virtually identical with those considered in Re Atlas Construction Group and that the Company should be reinstated on the same basis as an order for reinstatement was made in that case, and an order should be made reappointing Mr Elkerton as liquidator of the Company as if it had not been deregistered. Mr Baird also submits that an order should be made under s 601AH(3) of the Act validating all acts done by the liquidator or the Company during the period from 2 January 2019 to the date of the reinstatement order. I am satisfied that such an order should be made on the reinstatement of the Company in these circumstances, subject to addressing one matter raised by Mr Smallbone in submissions, to which I will now turn.
As I noted above, Messrs Choi and Lee, Ms Han and IBN Global Pty Ltd have sought to set aside certain orders for examination and orders for production made by the Court. Mr Smallbone submitted that the Court should make orders under s 601AH(3)(d) of the Act in respect of the reinstatement of the Company, dealing with aspects of that application. That section relevantly provides that the Court may make any other order that it considers appropriate in respect of an application for reinstatement. Mr Smallbone referred to several matters that are not presently in evidence, but which I will treat as common ground between the parties, since they have been canvassed in earlier directions hearings in respect of the application to set aside the examination summonses and orders for production. Mr Smallbone submits that the liquidator takes the position that Messrs Choi and Lee and Ms Han should not be heard in respect of their application to set aside the examination orders, or, more precisely, that those orders are out of time for the purposes of rule 5.11(2) of the Supreme Court (Corporations) Rules. Mr Smallbone submits that any order for reinstatement of the Company should only be made on a basis that, in effect, confirms the ability of Messrs Choi and Lee and Ms Han to bring that application and, in effect, displaces any issue as to noncompliance with rule 5.11 of the Supreme Court (Corporations) Rules arising from when that application was brought. Mr Smallbone points out that the application to set aside the examination's orders was not heard last Friday, 18 January 2019, when it had originally been listed with a view to hearing, because the Company was then deregistered and ASIC's preference was that the reinstatement application, which was a prerequisite to hearing that application, be heard today.
I am not satisfied that the delay in filing the application to set aside the examination summonses has any connection with the reinstatement of the Company that would warrant making such an order as a condition of the reinstatement. It appears that examination summonses were served on Mr Choi on 1 November 2018 and on Mr Lee and Ms Han on or about 9 November 2018. Over a month later, in the case of Mr Choi, or nearly a month later in the case of Mr Lee and Ms Han, they met with solicitors and thereafter with Counsel. Four days before the end of the Court term in 2018, a demand was made in respect of the examination summonses and, on the second last day of the Court term, an Interlocutory Process was filed seeking to set aside the examination summonses and orders for production. The examinations are due to commence on 31 January 2019. I have drawn these dates from Mr Smallbone's submissions in respect of the application to set aside the examination summonses and orders for production and assume that they are common ground.
It seems to me that any issue arising as to the Applicants' non-compliance with the time limit in r 5.11 of the Supreme Court (Corporations) Rules existed long before the deregistration of the Company on 2 January 2019, and arose from the delay in filing the application to set aside the examination summonses and orders for production. The Company's deregistration also had no impact on the fact that that application was made so close to the end of the Court term, where the examinations were due to take place at the beginning of the new court term in 2019. I recognise that a single hearing day was lost, in respect of the application, on 18 January 2019. Nonetheless, a hearing time is available this morning; a full hearing day is available on Wednesday 20 January 2019, although I recognise that that may cause inconvenience to Mr Smallbone, who is appearing in another matter that may or may not proceed before the Duty Judge in the duty list on that day; and further hearing time is available in the morning of Thursday and, if necessary, Friday, this week.
It seems to me, to be inconceivable that, properly dealt with, an application for an extension of time to bring an application to set aside an examination summons and orders for production, the substantive application and associated applications could not be dealt with in the time available. In those circumstances, it seems to me that there is not sufficient connection between the fact that these applications were brought out of time, and the deregistration of the Company, to support the condition sought by the Applicants. Here, the only link between them was the loss of one possible hearing day, which can readily be addressed by the hearing time available this week. I therefore do not impose any condition upon the reinstatement which would cause the application to set aside the examination summonses and orders to proceed other than in accordance with the applicable rules and in the course of this week.
Accordingly, I make orders in accordance with the short minutes of order initialled by me and placed in the file. I make a further order that these orders be entered forthwith.
[3]
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Decision last updated: 12 February 2019
Parties
Applicant/Plaintiff:
Yeo
Respondent/Defendant:
Australian Securities and Investments Commission, in the matter of JI Woo International Education Centre Pty Ltd