Manny v David Lardner & Associates

• Jurisdiction: Australian Capital Territory
• Court: Supreme Court of ACT
• Judge: McWilliam AsJ
• Judgment Date: 31 May 2018
• Date: 31 May 2018
• Docket Number: File Number: SC 527 of 2016

[2018] ACTSC 159

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Before:

McWilliam AsJ

File Number: SC 527 of 2016

Jeff Manny

(Plaintiff)

and

David Lardner & Associates

(First Defendant)

Representation:

Counsel

Self-represented (Plaintiff)

J Larkings (First Defendant)

Cases Cited:

AMP General Insurance Ltd v Victorian WorkCover Authority [2006] VSCA 236 ; 15 VR 175

Arnold World Trading Pty Ltd v ACN 133 427 335 Pty Ltd [2010] NSWSC 1369 ; 80 ACSR 670

Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16 ; 259 CLR 1

Australian Competition and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316 ; 174 ALR 688; 34 ACSR 232

Casali v Crisp [2001] NSWSC 860 ; 165 FLR 79

Gematech Pty Ltd v Bardi Investments Pty Ltd [2008] NSWSC 196

GIS Electrical Pty Ltd v Melsom [2002] WASCA 302 ; 172 FLR 218; 43 ACSR 481

Hanna v Australian Securities and Investments Commission (No 2) [2011] FCA 1491 ; 286 ALR 706

In the matter of ERB International Pty Ltd (deregistered) [2014] NSWSC 200 ; 98 ACSR 124

In the matter of VG Sotir Investments Pty Ltd [2017] NSWSC 1381

JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu [2008] FCA 433 ; 167 FCR 212; 65 ACSR 636

Kendirjian v Lepore [2017] HCA 13 ; 259 CLR 275

Leveraged Capital Pty Ltd (in liq) v Modena Imports Pty Ltd (in liq) [2010] NSWSC 739

Melluish v Underwood Development Pty Ltd [2004] NSWSC 429

Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWSC 38 ; 71 NSWLR 262

Re Data Homes Pty Ltd (in liq) [1972] 2 NSWLR 22

Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559

Re Gia Firenze Investments Pty Ltd [2013] NSWSC 99

Re Llenruk Pty Ltd [2013] NSWSC 1430

Re Mascot Home Furnishers Pty Ltd [1970] VR 593

Re Nature Springs Pty Ltd (in liq) (1994) 13 ACSR 50

Re Telescriptor Syndicate Ltd [1903] 2 Ch 174

Re Warbler Pty Ltd (1982) 6 ACLR 526

Reid v Action Insulation Engineers Pty Ltd [2009] NSWSC 1182

Simitzis v Australian Securities and Investments Commission [2017] VSC 614

Stone v ACN 000 337 940 Pty Ltd [2008] NSWSC 1058 ; 68 ACSR 424

Wyse & Young International Pty Ltd v Corrado [2015] NSWSC 1863

Yeo v Australian Securities and Investments Commission ; Re Ji Woo International Education Centre Pty Ltd (deregistered) [2017] FCA 1480

Legislation Cited:

Corporations Act 2001 (Cth) ss 482, 601AH

Court Procedures Rules 2006 (ACT) rr 30, 210, 223

Texts Cited:

Corporations Legislation 2018 (Thomson Reuters, 2018 ed)

CORPORATIONS LAW — reinstatement — plaintiff seeking to reinstate three companies to bring proceedings — where companies formerly in liquidation — where no liquidator has consented to act upon reinstatement — whether reinstatement just

Decision:

Direct the plaintiff to serve a copy of this judgment on any creditors of the Companies and stand the matter over in order to give the plaintiff the opportunity to bring in a consent of liquidator and any undertaking for the funding of the costs of that liquidator.

1 The plaintiff has brought two amended applications in proceedings, filed on 28 February 2018. The first is brought pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) ( Act) and seeks to reinstate three corporate entities that were deregistered on 15 May 2016. If that application is successful, the plaintiff seeks a further order pursuant to s 482 of the Act for the grant of a stay of the winding up either indefinitely or for a limited time.

2 The second application then seeks to join those corporate entities to the present proceedings as co-plaintiffs in the substantive claim against the first defendant.

The parties

3 The plaintiff, Mr Manny, was the sole director and shareholder of three corporate entities: Jeff Manny Constructions Pty Ltd ACN 083 451 870; JK3L Pty Ltd ACN 081 795 128; and Lonagann Pty Ltd ACN 099 576 904 ( Companies). Mr Manny was self-represented.

4 The first defendant is the former solicitor for Mr Manny and the Companies, who were all parties in family law proceedings conducted in 2010 and 2011. The first defendant was represented on the applications by Mr Larkings of counsel, from whom the Court received significant assistance, both orally and in writing, which has reduced the time taken to resolve the issues on the applications.

5 The Australian Securities and Investments Commission ( ASIC) was named as a respondent on the application. The attitude of ASIC has been considered below, but it did not appear at the hearing.

Relevant provisions

6 Section 601AH of the Act provides:

Reinstatement by ASIC

• (1) …

Reinstatement by Court

• (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.

• (3) If:

  • (a) ASIC reinstates the registration of a company under subsection ( 1) or (1A); or

  • (b) the Court makes an order under subsection (2);

  the Court may:

  • (c) validate anything done during the period:

    • (i) beginning when the company was deregistered; and

    • (ii) ending when the company's registration was reinstated; and

  • (d) make any other order it considers appropriate.

    Note: For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).

ASIC to give notice of reinstatement

• (4) ASIC must give notice of a reinstatement in the Gazette.

• (4A) If an application was made to ASIC for the reinstatement of a company's registration, ASIC must give notice of the reinstatement to the applicant.

Effect of reinstatement

• (5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.

7 The parts of s 482 of the Act that are material to this application are as follows:

Power to stay or terminate winding up

• (1) At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order.

• (1A) An application may be made by:

  • (a) in any case—the liquidator, or a creditor or contributory, of the company; or

    …

• (2) On such an application, the Court may, before making an order, direct the liquidator to give a report with respect to a relevant fact or matter.

• (2A) If such an application is made in relation to a company subject to a deed of company arrangement, …[not applicable here]

• (3) Where the Court has made an order terminating the winding up, the Court may give such directions as it thinks fit for the resumption of the management and control of the company by its officers, including directions for the convening of a general meeting of members of the company to elect directors of the company to take office upon the termination of the winding up.

• (4) The costs of proceedings before the Court under this section and the costs incurred in convening a meeting of members of the company in accordance with an order of the Court under this section, if the Court so directs, forms part of the costs, charges and expenses of the winding up.

• (5) Where an order is made under this section, the company must lodge an office copy of the order within 14 days after the making of the order.

Legal principles applying to the present applications

Factors relevant to reinstatement of a company

8 In deciding whether to reinstate a deregistered company, the Court considers the circumstances in which the company came to be dissolved, 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 and Consumer Commission v Australian Securities and Investments Commission [2000] NSWSC 316; 174 ALR 688; 34 ACSR 232.

9 The power to reinstate a company is purely discretionary and this includes a residual discretion to refuse the order even where the elements are satisfied: AMP General Insurance Ltd v Victorian WorkCover Authority [2006] VSCA 236; 15 VR 175.

10 If the basis for reinstatement is that the company has a cause of action that it might litigate, evidence is needed to show that reinstatement is likely to lead to the litigation being pursued and also that there is a benefit to the company or its creditors, including the applicant for reinstatement, in the litigation being pursued: Simitzis v Australian Securities and Investments Commission [2017] VSC 614.

11 If a company would be insolvent upon reinstatement, then reinstatement may be refused in the event that the applicant fails to undertake to pay the reasonable fees of a liquidator: Hanna v Australian Securities and Investments Commission (No 2) [2011] FCA 1491; 286 ALR 706.

12 If a company that is reinstated has been wound up, the liquidator will not automatically be restored to office on reinstatement and the Court will need to appoint a liquidator: JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu [2008] FCA 433; 167 FCR 212; 65 ACSR 636.

13 The Court is entitled to impose conditions upon reinstatement to ensure that the order operates in a just manner, and such conditions may, in an...