Grogan Pty Ltd v Australian Securities and Investments Commission, in the matter of SIRA Pty Ltd (Deregistered)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 21 December 2020
• Neutral Citation: [2020] FCA 1832
• Date: 21 December 2020

Federal Court of Australia

Grogan Pty Ltd v Australian Securities and Investments Commission, in the matter of SIRA Pty Ltd (Deregistered) [2020] FCA 1832

File number(s):	VID 785 of 2020
Judgment of:	O'CALLAGHAN J
Date of judgment:	21 December 2020
Catchwords:	CORPORATIONS – application for reinstatement of registration of company pursuant to s 601AH of the Corporations Act 2001 (Cth) – purpose of proposed reinstatement to seek immediate winding up of company and appointment of liquidator to explore claims against former directors – whether winding up would be just and equitable within the meaning of s 461(1)(k) of the Corporations Act 2001 (Cth) – applications granted
Legislation:	Corporations Act 2001 (Cth) ss 461(1)(k), 601AH(2)
Cases cited:	Brereton v Australian Securities and Investments Commission [2007] FCA 651 CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd (2006) 201 FLR 296 Deputy Commissioner of Taxation v Australian Securities and Investments Commission [2010] FCA 1411; 81 ATR 456 Pilarinos v Australian Securities and Investments Commission [2006] VSC 301 Re Brockweir Pty Ltd [2012] VSC 225 Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200 Yeo v Australian Securities and Investments Commission, in the matter of Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480
Division:	General Division
Registry:	Victoria
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	21
Date of hearing:	17 December 2020
Counsel for the Plaintiff:	Mr MP Costello
Solicitor for the Plaintiff:	Piper Alderman
Counsel for the Defendant:	The defendant did not appear
Counsel for the Interested Party:	Ms CF Gobbo
Solicitor for the Interested Party:	Maddocks

ORDERS

		VID 785 of 2020
IN THE MATTER OF SIRA PTY LTD (DEREGISTERED)
BETWEEN:	GROGAN PTY LTD (ACN 131 880 996) Plaintiff
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Defendant

order made by:	O'CALLAGHAN J
DATE OF ORDER:	21 December 2020

THE COURT ORDERS THAT:

1. Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act), the defendant forthwith reinstate the registration of SIRA Pty Ltd (Deregistered) (ACN 163 988 690) (Company).

2. All notification and advertising requirements in relation to an application for the winding up of the Company be dispensed with.

3. Upon reinstatement of its registration, the Company be wound up pursuant to s 461(1)(k) of the Act.

4. Upon reinstatement of its registration, John Lindholm and George Georges, registered liquidators, be appointed liquidators of the Company pursuant to s 472 of the Act.

5. Upon reinstatement of its registration, the registered office of the Company be KPMG of Tower Two Collins Square, 727 Collins Street, Docklands VIC 3008.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

1. This is an application by the plaintiff (Grogan) seeking orders that:

1. the Australian Securities and Investments Commission (ASIC) reinstate the registration of the company formerly known as SIRA Pty Ltd (SIRA) pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act);

2. on reinstatement, SIRA be wound up pursuant to s 461(1)(k) of the Act; and

3. John Lindholm and George Georges be appointed liquidators in the winding up of SIRA.

2. SIRA was incorporated to develop a technology to create healthier sugar from sugar cane. Mr Grogan, a shareholder of Grogan, was previously SIRA’s Chief Executive Officer and one of its directors. Grogan was a 14.3% shareholder in SIRA.

3. At the hearing of the proceeding on 17 December 2020, Mr Mark Costello of counsel appeared on behalf of Grogan. Ms Catherine Gobbo of counsel appeared for Dr Kannar, who was also previously a director of SIRA. Ms Gobbo applied for an adjournment of the hearing, in order, among other things, to give Dr Kannar and possibly other ex-directors more time to consider their position, but I refused the application for reasons I gave at the hearing.

4. ASIC does not oppose the making of the orders.

5. Grogan relies on an affidavit of Mr Grogan sworn 9 December 2020, which deposes to SIRA’s history and the circumstances by which it came to be deregistered.

6. Section 601AH(2) of the Act provides:

(2) The Court may make an order that ASIC reinstate the registration of a company if:

(a) an application for reinstatement is made to the Court by:

(i) a person aggrieved by the deregistration; or

(ii) a former liquidator of the company; and

(b) the Court is satisfied that it is just that the company’s registration be reinstated.

7. As to the meaning in this context of a “person aggrieved”, in Brereton v Australian Securities and Investments Commission [2007] FCA 651 at [2] Finkelstein J explained:

The expression ‘person aggrieved’, which is of wide import, has been interpreted to mean a person who has a genuine grievance because of prejudice suffered to his interest from the act complained of: Attorney-General of Gambia v N’Jie [1961] AC 617, 634. His interest must be a real and direct interest in the act or in the consequences of the act and he must be dissatisfied with it: Day v Hunter [1964] VR 845, 847, 849. The expression does not include a mere busy-body who is interfering in things that do not concern him: Deputy Commissioner of Taxation v Lanstel Pty Ltd (1996) 2 ACSR 314, 315-316. On the other hand, a person who is deprived of something or is adversely affected by the act is a ‘person aggrieved’: Re Formcrete Services Pty Ltd (1976) 2 ACLR 46, 48.

8. Further, in assessing whether a claimant is a person aggrieved “it is not necessary to embark upon a detailed and exhaustive analysis of the facts and the law underpinning the claim. The threshold is low. The assessment needs to be dealt with in a summary way. As long as the claim is not plainly hopeless and bound to fail, it should, subject to other relevant matters, proceed”. See Re Brockweir Pty Ltd [2012] VSC 225 at [22] (Sifris J). See also generally Yeo v Australian Securities and Investments Commission, in the matter of Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480 at [11]ff (Gleeson J).

9. The requirement that reinstatement be just vests in the court a broad discretion. Relevant considerations include the circumstances in which the company was deregistered, the purpose in seeking its reinstatement, whether any person is likely to be prejudiced by reinstatement, and the public interest generally. See, by way of example only, Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200 at [5] (Brereton J).

10. The gist of Grogan’s concern set out in Mr Grogan’s affidavit, and elaborated upon in Mr Costello’s written and oral submissions, is that the other co-owners of SIRA, including Dr Kannar, may have diverted the benefit of the sugar technology from SIRA under cover of agreements ostensibly designed to facilitate further equity funding in SIRA by DELCOR Asset Management Pty Ltd (DELCOR). More specifically, that concern arises from: (i) the removal of Mr Grogan as CEO and a director of SIRA; (ii) an application for certain patents in the name of Mr Grogan’s replacement as CEO, Dr Kannar; (iii) the transfer of those patents to a Singaporean entity controlled by Dr Kannar; and (iv) the compromise of debts owed by SIRA before its deregistration.

11. Grogan says that SIRA did not conduct a formal winding up process subject to the supervision of a liquidator. Rather, it says, Dr Kannar and DELCOR “informally” ceased SIRA’s trading activities, and directly compromised with some creditors, returning only 3.95 cents in the dollar.

12. ...