FEDERAL COURT OF AUSTRALIA McIntyre v Eastern Prosperity Investments Pte Ltd (No 6) [2005] FCA 155 CORPORATIONS - deregistered foreign corporation – respondent to proceedings – interlocutory costs order in favour of corporation – costs to be payable forthwith – whether recoverable by corporation – effect of prior deregistration – continued existence of corporation as legal entity – capacity to be sued – entitlement to be represented and to seek costs orders – re-registration of deregistered foreign corporation – application for re-registration as fresh registration application – not made as application for restoration to register – adequacy of procedures to monitor applications for fresh registration by deregistered companies Corporations Act 2001 (Cth) s 601CD(1) Federal Court of Australia Act 1976 (Cth) McIntyre v Eastern Prosperity Investments Pte Ltd (No 4) [2002] FCA 1133 cited McIntyre v Eastern Prosperity Investments Pte Ltd (No 5) [2003] FCA 254 cited Chaff and Hay Acquisition Committee v JA Hemphill & Sons Pty Ltd (1947) 74 CLR 375 cited Russian Commercial and Industrial Bank v Comptoir D'Escompte de Mulhouse [1925] AC 112 cited Feng v GMS Fulfilment Service Ltd (2004) 50 ACSR 527 cited Hansen v Millars' Karri & Jarrah Co (1905) WAR 266 cited Concrete Engineering & Contracting Company Ltd v Hardie Trading Pty Ltd (1928) SASR 132 cited DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION) v EASTERN PROSPERITY INVESTMENTS PTE LTD and DBF PROPERTY HOLDINGS PTY LTD AS TRUSTEE FOR THE FREARSON FAMILY TRUST WAD243 OF 2000 FRENCH J 1 MARCH 2005 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD243 OF 2000 BETWEEN: DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION) APPLICANT DONALD COLIN MCINTYRE AND PATRICIA ANN MCINTYRE TRADING AS VICTORIA PARK TRAVELWORLD (SHOP 24) First Group Member PAUL STANLEY SCRUTTON AND BEVERLEY MAUREEN SCRUTTON TRADING AS PHOTOMAT VICTORIA PARK (SHOP 20) Second Group Member DENNIS BEAUMONT AS TRUSTEE FOR THE BEAUMONT FAMILY TRUST TRADING AS INNERSPIN COMPACT DISCS (SHOP 8) Third Group Member KERRY GEORGE AND FREDERICK WILLIAM GEORGE TRADING AS THE HEART COFFEE LOUNGE (SHOP 21) Fourth Group Member PHIMCHAI SMITH TRADING AS PHUKET THAI RESTAURANT (SHOP 44) Fifth Group Member KENNETH JECKS AND IRENE FUSSEL TRADING AS PLAYFUL PETS (SHOP 31) Sixth Group Member ARMIN PODGORNY AND SABINA PODGORNY TRADING AS GOURMET AVIGNON (SHOP 33) Seventh Group Member DAVID THAMBIPILLAI AS TRUSTEE FOR THE NEW DAY TRUST TRADING AS CURRY BOWL INDIAN TAKEAWAY (SHOP 45) Eighth Group Member BRENDAN REIDY-CROFT CEASED TRADING AS ZIPPY MULTI SERVICES (SHOP 47) Ninth Group Member MILAN SIMIC AND ANNA SIMIC TRADING AS MARTINS SKEWERS (SHOP 10) Tenth Group Member ALLAN AND HELEN LAWRENCE CEASED TRADING AS HAVA LOOK DISCOUNTS (SHOP 23) Eleventh Group Member KIM LIEN LAM TRADING AS FAIRY PATISSERIE (SHOP 26) Twelfth Group Member THIONG AIK GAN AND BEE TIN TAN TRADING AS TEONGBEE MALAYSIAN FOODS (SHOP 42) Thirteenth Group Member SHIRLEY JANE FRUDE CEASED TRADING AS AZALEA FLORIST AND GIFT BASKET (SHOP 9) Fourteenth Group Member AND: EASTERN PROSPERITY INVESTMENTS PTE LTD (ACN 065 747 006) FIRST RESPONDENT DBF PROPERTY HOLDINGS PTY LTD (ACN 082 702 103) AS TRUSTEE FOR THE FREARSON FAMILY TRUST SECOND RESPONDENT JUDGE: FRENCH J DATE OF ORDER: 1 MARCH 2005 WHERE MADE: PERTH THE COURT ORDERS THAT: On the applicant's motion filed 30 November 2004: 1. The motion be dismissed. 2. The applicant pay the first respondent's costs of the motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD243 OF 2000 BETWEEN: DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION FIRST APPLICANT DONALD COLIN MCINTYRE AND PATRICIA ANN MCINTYRE TRADING AS VICTORIA PARK TRAVELWORLD (SHOP 24) First Group Member PAUL STANLEY SCRUTTON AND BEVERLEY MAUREEN SCRUTTON TRADING AS PHOTOMAT VICTORIA PARK (SHOP 20) Second Group Member DENNIS BEAUMONT AS TRUSTEE FOR THE BEAUMONT FAMILY TRUST TRADING AS INNERSPIN COMPACT DISCS (SHOP 8) Third Group Member KERRY GEORGE AND FREDERICK WILLIAM GEORGE TRADING AS THE HEART COFFEE LOUNGE (SHOP 21) Fourth Group Member PHI CHAI SMITH TRADING AS PLUNKET THAI RESTAURANT (SHOP 44) Fifth Group Member KENNETH JACKS AND IRENE FUSSEL TRADING AS PLAYFUL PETS (SHOP 31) Sixth Group Member ARMIN PODGORNY AND SABINA PODGORNY TRADING AS GOURMET AVIGNON (SHOP 33) Seventh Group Member DAVID THAMBIPILLAI AS TRUSTEE FOR THE NEW DAY TRUST TRADING AS CURRY BOWL INDIAN TAKEAWAY (SHOP 45) Eighth Group Member BRENDAN REIDY-CROFT CEASED TRADING AS ZIPPY MULTI SERVICES (SHOP 47) Ninth Group Member MILAN SIMIC AND ANNA SIMIC TRADING AS MARTINS SKEWERS (SHOP 10) Tenth Group Member ALLAN AND HELEN LAWRENCE CEASED TRADING AS HAVA LOOK DISCOUNTS (SHOP 23) Eleventh Group Member KIM LIEN LAM TRADING AS FAIRY PATISSERIE (SHOP 26) Twelfth Group Member THIONG AIK GAN AND BEE TIN TAN TRADING AS TEONGBEE MALAYSIAN FOODS (SHOP 42) Thirteenth Group Member SHIRLEY JANE FRUDE CEASED TRADING AS AZALEA FLORIST AND GIFT BASKET (SHOP 9) Fourteenth Group Member AND: EASTERN PROSPERITY INVESTMENTS PTE LTD (ACN 065 747 006) FIRST RESPONDENT DBF PROPERTY HOLDINGS PTY LTD (ACN 082 702 103) AS TRUSTEE FOR THE FREARSON FAMILY TRUST SECOND RESPONDENT JUDGE: FRENCH J DATE: 1 MARCH 2005 PLACE: PERTH REASONS FOR JUDGMENT ON MOTION TO SET ASIDE COSTS ORDERS Introduction 1 These proceedings, which have a long history, were commenced in December 2000 against two corporations one of which was a foreign company formed in Singapore and registered in Australia with the Australian Registered Body Number (ARBN) 065 747 006. The name of the foreign corporation, which is the first respondent, was removed from the register on 28 February 2001 apparently on the basis that it had ceased to carry on business in this jurisdiction. A foreign company of the same name applied for and obtained registration in August 2001. It was given a new ARBN at that time, namely ARBN 097 952 193. The first respondent continued as such in these proceedings and continued to be named using the original ARBN. 2 An interlocutory costs order was made in favour of the first respondent in September 2002. The costs ordered were payable 'forthwith'. The company was wound up and a liquidator appointed on 17 March 2003. The application as a whole was dismissed by an order made on 25 March 2003. That dismissal order is the subject of an unresolved application for leave to appeal, mediation of which is evidently still pending. The company issued a writ of fi fa to recover the taxed costs of $4,700 in July 2004. 3 The applicant has filed a motion seeking to set aside the costs order. He argues that because of the removal of its name from the register, the first respondent ceased to exist in February 2001 and cannot recover costs. The question of the identity of the first respondent with the company registered in August 2001 under ARBN 097 952 193 has also been raised. 4 In my opinion, the company registered afresh in August 2001 was the company whose name was removed from the register in February of that year. Even if that re-registration were ineffective, the company was, at all times, a legal entity created by the law of Singapore and able to be sued in this Court. As an incident of that capacity it could be the beneficiary of a costs order and of an entitlement to enforce it. The winding up order would no doubt have vested that entitlement in the liquidator. 5 In my opinion the applicant's challenge to the costs order made in favour of the first respondent must fail. The case does throw up a question about the adequacy of the law and procedures in place in relation to the registration of foreign corporations whose names have been removed from the register. Procedural Background 6 These proceedings were commenced on 22 December 2000. They were brought against Eastern Prosperity Investments Pte Ltd (ACN 065 747 006) (Eastern Prosperity) named as first respondent and DBF Property Holdings Pty Ltd (ACN 082 702 103) (DBF) as trustee for the Frearson Family Trust, named as second respondent. Eastern Prosperity was the owner of the Heart of the Park Shopping Centre at Victoria Park. DBF was the centre manager. 7 On 12 September 2002, I made an order that the statement of claim be struck out and that the applicant pay the respondents' costs of motions filed on 31 May and 4 June 2002 forthwith – McIntyre v Eastern Prosperity Investments Pte Ltd (No 4) [2002] FCA 1133. 8 On 25 March 2003, I made an order that the application as a whole be dismissed and that the applicant, Mr McIntyre, pay the respondents' costs of the application – McIntyre v Eastern Prosperity Investments Pte Ltd (No 5) [2003] FCA 254. An application for leave to appeal against that order was made and came before the Full Court on 13 August 2003. On Mr McIntyre's application the hearing of the application for leave to appeal was adjourned after some argument. The Full Court directed that there be a limited pro bono representation arranged for the applicant by the District Registrar to provide advice in relation to the application for leave to appeal, possible representation and to appear in a mediation proceeding in relation to the appeal itself. In the event pro bono counsel was engaged but subsequently ceased to act. I am informed by the District Registrar that a mediation conference is to occur shortly. The application for leave to appeal has not been relisted. 9 The costs which had been awarded on 12 September 2002, on the basis that they were to be payable by the applicant forthwith, were taxed and assessed at $4,700. A certificate of taxation was signed by a Deputy District Registrar on 19 November 2003. On 2 July 2004, a Writ of Fi Fa issued against Mr McIntyre in relation to those costs. On 30 November 2004, Mr McIntyre filed a motion seeking, inter alia, the following orders: '2. The Order for Costs extracted by solicitors Karp Steadman (sic) & Ross-Adjie alleged in favour of the First Respondent pursuant to the Order of Justice French on 25 March 2003 be set aside. 3. The Warrant of Execution issued pursuant to the Order for Costs including the land seizure notice being Writ of FI FA 214/2004 be stayed pending the determination of the relief set out in paragraph 2 above. 4. Costs be in the cause. 5. Such further and other Orders as the Court deems meet.(sic)' The terms of the motion suggest a misunderstanding that the writ of fi fa related to the costs order of 25 March 2003. However those costs have not been taxed. I will treat that part of the motion, which seeks to set aside the order for costs backing the writ of fi fa, as referring to the costs order made on 12 September 2002. 10 At a directions hearing on 21 December 2004, it emerged that Mr McIntyre had not served the motion or the supporting affidavit on the solicitors for the first respondent apparently because he had formed the view or had been advised that the solicitors had no authority to represent a deregistered foreign company. I directed that he serve the solicitors by close of business that day and that the first respondent file and serve any affidavit in reply by 21 January 2005. The Factual Basis Relevant to the Motion 11 The essential facts underlying Mr McIntyre's contentions are not in dispute. The first respondent was incorporated under the laws of Singapore on 9 September 1993, initially under the name Eltrio Investments Pte Ltd. That company changed its name to Eastern Prosperity on 3 January 1994. It applied to the former Australian Securities Commission for registration as a foreign company on 6 August 1994. Its principal business office and its registered office were located in Singapore. The company was registered with an ARBN 065 747 006. 12 A search of the records of ASIC shows that in the period 31 May 2000 to 27 February 2001 deregistration action was instituted and continued against the company by ASIC. ASIC's stated reason for commencing that action was the failure of the company to comply with s 601CK of the Corporations Law and its failure to lodge accounts with ASIC in 1999. This appears from a document exhibited to Mr McIntyre's affidavit of 29 November 2004. The document was headed 'Record of Reason for Commencing De-Registration Action'. It referred to s 601CL of the Corporations Law and under the words 'Reason' stated: 'This is a foreign company which has failed to comply with section 601CK of the Corporations Law and has not lodged accounts with the Australian Securities and Investment Commission in 1999.' A letter was sent to ASIC by the company's accountants on 19 June 2000 stating that it was currently carrying on business in Australia and requesting that its registration not be cancelled. The company's name was nevertheless removed from the register on 28 February 2001. Notwithstanding its deregistration in Australia, the company continued in existence in Singapore and did not lose its registration there. There was evidence by way of a company search in Singapore, which indicated that the company had failed to file its annual return and was in breach of s 197(7) of the Companies Act (Cap 50 of Singapore). The search indicated that as at 20 June 2001 the status of the company in Singapore was 'Live'. 13 A company of the same name as the first respondent made an application for registration in Australia and was registered as a foreign company on 29 August 2001 with a number ARBN 097 952 193. On 31 January 2002, Mr John Corrello was appointed receiver and manager to the re-registered company's assets. That appointment was made by Perpetual Trustees Victoria Ltd under securities which it held over assets of the company. A further appointment in relation to real property was made by the same security holder on 14 February 2002. The notice of appointment in each case referred to the company as 'Eastern Prosperity Investments Pte Ltd ARBN 097 952 193 (previously ARBN 065 747 006)'. 14 On 17 March 2003, Eastern Prosperity Pte Ltd (ARBN 097 952 193) was the subject of a winding up order in the Supreme Court of Western Australia. Melvyn Malcolm Posner was appointed as its liquidator. The order was made on the application of Service Finance Corporation Pty Ltd. The ARBN shown in the proceedings was ARBN 097 952 193. 15 An ASIC search conducted on Eastern Prosperity (ARBN 065 747 006) on 26 November 2004 showed it as deregistered at that date. It showed the directors of the company up to the point of deregistration as Ang Kho Thang who had been appointed on 30 December 1993 and Meow Loke Ang who had been appointed on 22 November 1996. The local agent was described as DBF Property Holdings Pty Ltd, appointed on 23 May 2000 and ceasing on 1 September 2000. A search dated 19 January 2005 of Eastern Prosperity (ARBN 097 952 193) showed as 'current directors' Kho Thang and Loke Ang Meow both appointed on 17 August 1994. Their dates of appointment did not coincide with the dates of appointment shown for Eastern Prosperity (ARBN 065 747 006). 16 Mr Karp, the solicitor for the first respondent, said in his affidavit that: '... on 29 August 2001 the first respondent again became registered as a foreign company in Australia, and was allocated a new ARBN 097 952 193.' Mr Jeffrey Malone, a solicitor employed by Karp Steedman Ross-Adjie, the solicitors for the first respondent, deposed in an affidavit to inquiries he made in January and February 2005 about the identity of the companies designated Eastern Prosperity with the two ARBNs. He spoke with the former accountant to Eastern Prosperity, a Mr Lim, who was unable to assist him. He had no relevant memory and no documents. 17 The ASIC records in relation to the company or companies named as Eastern Prosperity, distinguished by the two ARBNs show the same address for the registered office in Singapore. Both also show the same address for their Australian registered office. The directors of the deregistered company as at the date of deregistration and that of the freshly registered company are the same, albeit the records show different dates for their appointment. 18 Despite the discrepancy in the date of appointment of the directors, I am satisfied, on the balance of probabilities, that the ASIC records are referring to the same company. That is to say the first respondent was deregistered on 28 February 2001 but registered afresh with a different ARBN on 29 August 2001. 19 The fact that such a process was possible, notwithstanding specific provisions of the Corporations Act 2001 (Cth) for applications for restoration to the register on limited conditions, raise a question about the controls on the registration and re-registration of foreign companies which may require some consideration. It may be that a company seeking registration should be required to disclose whether it has had a former ARBN in Australia. The Contentions 20 Mr McIntyre submits that by reason of its deregistration the first respondent was unable to be represented by anybody after 28 February 2001. He submits that it ceased to exist 'at law' from that date. If not properly registered the company was not entitled to recover its costs. On that basis he argued that the costs orders in favour of the company should be set aside. Statutory Framework 21 Division 2 of Part 5B.2 of the Corporations Act deals with foreign companies. It provides, in s 601CD, as follows: '(1) A foreign company must not carry on business in this jurisdiction unless: (a) it is registered under this Division; or (b) it has applied to be so registered and the application has not been dealt with.' Section 601CD(2) is not material for present purposes. 22 Section 601CL provides for removal of the name of a registered foreign company from the register on the grounds that: (a) ASIC has received notice from its local agent that it has been dissolved or deregistered (s 601CL(2)). (b) It does not carry on business in the jurisdiction (s 601CL(3)). The effect of removing the company's name from the register pursuant to these provisions is that it ceases to be registered under Div 2. 23 Section 601CL(8) allows for restoration of a foreign company's name to the register where ASIC is satisfied that it was struck off as a result of an error on ASIC's part. Section 601CL(9) allows a person aggrieved by a foreign company's deregistration to, apply to the court, within 15 years after the striking off, for restoration of the company to the register. If the court is satisfied that at the time of striking off the foreign company was carrying on business in this jurisdiction or that it is otherwise just for the foreign company's name to be restored to the register, the court may make a direction that it be so restored and give ancillary directions (s 601CL(10)). 24 Part 5A.1 deals with deregistration generally. It authorises ASIC to deregister a company if its annual return is at least six months late, it has not lodged any other document within the preceding 18 months and ASIC has no reason to believe it is carrying on business (s 601AB(1)). Section 601AD(1) provides that '... a company ceases to exist on deregistration'. That, however, has no application to a foreign corporation which owes its existence to the laws of another country. That conclusion is consistent with the authorities to which reference is made below. The Effect of Deregistration 25 It may be assumed for present purposes that Eastern Prosperity, the first respondent, was deregistered on 28 February 2001 and has not validly been re-registered since. That assumption involves no finding about whether it is possible for a deregistered foreign corporation to get back on the register simply by lodging a new application for registration and obtaining a new ARBN. No finding about the validity of the fresh registration is necessary. That is because the existence of the first respondent as a legal entity derives from its incorporation under the laws of Singapore. It does not derive from the fact of registration under the Corporations Law or the current Corporations Act. As a matter of comity its existence as a legal entity by reason of Singapore law entitles it to recognition as such in this jurisdiction. 26 In Chaff and Hay Acquisition Committee v JA Hemphill & Sons Pty Ltd (1947) 74 CLR 375, Latham CJ referred to the well established principle with respect to foreign corporations that a legal entity in one jurisdiction is by comity recognised as a legal entity elsewhere. He said (at 385): 'The same principle is applied to the recognition of bodies created by foreign law which have rights and liabilities distinct from those of the natural persons who constitute them.' Williams J said, at 396, quoting Lord Wrenbury in Russian Commercial and Industrial Bank v Comptoir D'Escompte de Mulhouse ([1925] AC 112 at 148-149): 'There is no question but that according to private international law and according to the comity of nations a foreign corporation is for many purposes recognized as a corporation here. It may sue and be sued here in its corporate name.' 27 In Feng v GMS Fulfilment Service Ltd (2004) 50 ACSR 527, a plaintiff sought re-registration of a deregistered New Zealand company so that he could sue it for damages for personal injuries. The application for restoration of the company to the register was made under Div 2 of Pt 5B.2 of the Corporations Act. In dismissing the application Barrett J held that the registration of the New Zealand company under the Australian Act was not a prerequisite to taking action against it. He said (at [12]): '... it is simply not the case that the plaintiff's ability to proceed against the defendant for damages is precluded or prejudiced by the absence of the defendant's name from the register of foreign corporations kept under Div 2 of Pt 5B.2 of the Corporations Act. The defendant is a "legal entity in its own right" according to the law of New Zealand ... Such a corporate entity may be made a defendant in our courts whether or not registered under Australian statutory provisions with respect to foreign companies.' 28 Mr McIntyre relied upon two cases, Hansen v Millars' Karri & Jarrah Co (1905) WAR 266 and Concrete Engineering & Contracting Company Ltd v Hardie Trading Pty Ltd (1928) SASR 132. Each of those cases was, however, concerned with the capacity of a foreign company to sue in the relevant State court. Neither has any bearing upon the present situation. 29 In my opinion Eastern Prosperity, notwithstanding its deregistration, was able to be sued in this Court. That is so even on the assumption that its deregistration continued up to and including the winding up order made against it. It is a corollary of the proposition that a deregistered foreign corporation can be sued in this Court, that it is entitled to representation to defend itself and to the ordinary incidents of such representation including the capacity to apply for a costs order in its favour. The power of the Court to award costs is conferred by the Federal Court of Australia Act 1976 (Cth) and is not affected by the fact of deregistration. The company, now being in liquidation, the entitlement to recover costs vests in the liquidator. 30 In my opinion, for these reasons, the motion must be dismissed with costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 1 March 2005 Mr DC McIntyre appeared on his own behalf Counsel for the First Respondent: Mr AH Karp Solicitor for the First Respondent: Karp Steedman Ross-Adjie Counsel for the Second Respondent: Mr J Mattys Solicitor for the Second Respondent: Minter Ellison Date of Hearing: 28 January 2005 Date of Judgment: 1 March 2005