FEDERAL COURT OF AUSTRALIA Wedgewood Hallam Pty Ltd v Australian Securities and Investments Commission, in the matter of Combined Building Consultants Pty Ltd [2011] FCA 439 Citation: Wedgewood Hallam Pty Ltd v Australian Securities and Investments Commission, in the matter of Combined Building Consultants Pty Ltd [2011] FCA 439 Parties: WEDGEWOOD HALLAM PTY LTD (ACN 076 481 706), GLOBAL PET PRODUCTS PTY LTD (ACN 005 666 599), PARADISE RETAIL HOLDINGS PTY LTD (ACN 105 253 441), PETS PARADISE PTY LTD (ACN 005 558 378) and LICENSED PRODUCTS RETAILING PTY LTD (TRADING AS WARNER BROTHERS STUDIO STORE) (ACN 089 455 112) v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION File number: VID 300 of 2011 Judge: GORDON J Date of judgment: 3 May 2011 Date of hearing: 3 May 2011 Date of last submissions: 3 May 2011 Place: Melbourne Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 12 Counsel for the Plaintiffs: Mr R Attiwill Solicitor for the Plaintiffs: DLA Piper Australia Counsel for the Defendant: Mr P Paleologos Solicitor for the Defendant: Australian Securities and Investments Commission IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 300 of 2011 IN THE MATTER OF COMBINED BUILDING CONSULTANTS PTY LTD (ACN 067 407 943) BETWEEN: WEDGEWOOD HALLAM PTY LTD (ACN 076 481 706) First Plaintiff GLOBAL PET PRODUCTS PTY LTD (ACN 005 666 599) Second Plaintiff PARADISE RETAIL HOLDINGS PTY LTD (ACN 105 253 441) Third Plaintiff PETS PARADISE PTY LTD (ACN 005 558 378) Fourth Plaintiff LICENSED PRODUCTS RETAILING PTY LTD (TRADING AS WARNER BROTHERS STUDIO STORE) (ACN 089 455 112) Fifth Plaintiff AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Defendant JUDGE: GORDON J DATE OF ORDER: 3 MAY 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The defendant reinstate the registration of Combined Building Consultants Pty Ltd (ACN 067 407 943). 2. Prior to a copy of this order as authenticated being lodged with the defendant together with a completed Form 105, the plaintiffs pay the defendant's costs with respect to this proceeding fixed in the sum of $495.00. 3. The plaintiffs serve a copy of this order as authenticated on Howard Craig Owen, by posting it by pre-paid ordinary post to his last known address. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 300 of 2011 IN THE MATTER OF COMBINED BUILDING CONSULTANTS PTY LTD (ACN 067 407 943) BETWEEN: WEDGEWOOD HALLAM PTY LTD (ACN 076 481 706) First Plaintiff GLOBAL PET PRODUCTS PTY LTD (ACN 005 666 599) Second Plaintiff PARADISE RETAIL HOLDINGS PTY LTD (ACN 105 253 441) Third Plaintiff PETS PARADISE PTY LTD (ACN 005 558 378) Fourth Plaintiff LICENSED PRODUCTS RETAILING PTY LTD (TRADING AS WARNER BROTHERS STUDIO STORE) (ACN 089 455 112) Fifth Plaintiff AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Defendant JUDGE: GORDON J DATE: 3 MAY 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 An application has been filed by Wedgewood Hallam Pty Ltd (ACN 076 481 706) and four other plaintiffs (the Plaintiffs) seeking an order pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (the Act) for the reinstatement of the registration of Combined Building Consultants Pty Ltd (ACN 067 407 943) (CBC). 2 Section 601AH(2) of the Act relevantly 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. (3) If the Court makes an order under subsection (2), it may: (a) validate anything done between the deregistration of the company and its reinstatement; and (b) make any other order it considers appropriate. … 3 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 the Australian Securities and Investments Commission (ASIC) or the Court reinstates the company. Any property of the company that is still vested in ASIC re-vests 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. 4 CBC was deregistered on 14 May 2008 pursuant to s 601AA of the Act following an application by the members of CBC. At the time of application, the members and sole director of CBC considered that the requirements of s 601AA(2) had been satisfied. The plaintiffs now contend that the director of CBC, Mr Howard Craig Owen, in resolving to make application to ASIC for the company to be deregistered, may have proceeded on wrong bases: in that he certified that the company had assets worth less than $1,000 and had no outstanding liabilities. It will be necessary to return to consider some of these requirements in further detail below. 5 The application for reinstatement is neither opposed nor consented to by ASIC. Notwithstanding the lack of opposition, an application for reinstatement must satisfy two requirements: that the applicants for reinstatement are persons aggrieved (s 601AH(2)(a)) and secondly, that the Court is satisfied that it is just that the company's registration be reinstated (s 601AH(2)(b)). These two conditions are conjunctive, not disjunctive. The requirement that the Court be satisfied that it is just that the company's registration be reinstated is not constrained by any particular criterion. However, the authorities make it clear that there are a number of matters which ought to be taken into account, namely the circumstances in which the company came to be deregistered, the future activities of the company if an order be made and also whether any particular person is likely to be prejudiced by the reinstatement: see for example, Promnite v Australian Securities and Investments Commission (2004) 22 ACLC 108; Re Kilkenny Engineering Pty Ltd (In Liq) (1976) 13 SASR 258; Drysdale v Australian Securities Commission (1992) 10 ACLC 1427; Re Steelmaster Pty Ltd (In Liq); Kenny v McCann (1992) 10 ACLC 176; Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688; Re Smith (a former liquidator of Dallma Multifab Engineering Company Pty Ltd) (2005) 54 ACSR 672. 6 Against that background, it is to the current application that I now turn. The plaintiffs are persons aggrieved by the deregistration: see s 601AH(2)(a) and Casali v Crisp [2001] NSWSC 860 at [27] referring to Olney J in Re Waldcourt Investment Co Pty Ltd (1986) 11 ACLR 7 at 12. 7 The plaintiffs seek the re-registration of CBC so that they may institute proceedings against it in the Supreme Court of Victoria. A copy of the draft writ and statement of claim was in evidence before the Court. The claim concerns building and occupancy permit services provided by CBC in or around July 1997 in relation to a warehouse that was situated at 24-26 Wedgewood Road, Hallam (the warehouse). In or about July 1997, the first plaintiff, Wedgewood Hallam Pty Ltd (ACN 076 481 706) became the registered proprietor of the warehouse. On 14 May 2005, a fire broke out in the main warehouse. The entire warehouse and significant stock contents were destroyed. At the time, the warehouse was not fitted with a sprinkler system. At the time of the fire, the warehouse was used as a storage facility for pet shop products, pet food, imported merchandise for the Pets Paradise franchise chain, Warner Brothers studios and also products for a chain of restaurants called Billy Baxters. The other plaintiffs lost items and products stored in the warehouse at the time of the fire. 8 The plaintiffs' solicitor, Mr Bennett, gave sworn evidence that he has received expert advice that, at the time of its construction, the warehouse would have had a particular fire rating that required it to have a sprinkler system installed in it and that CBC should not have issued the certificate of final inspection in the absence of a sprinkler system. In addition to needing to reinstate CBC, the plaintiffs face two further difficulties – they are presently unable to identify the name of any professional indemnity insurer of CBC at the relevant time and the action against CBC may become statute barred by 14 May 2011. 9 A person may be aggrieved by the deregistration of a company if that person has a claim against the company: Arnold v Poltane Pty Ltd [2005] FCA 1418 at [4] and Donmastry Pty Ltd v Albarran (2004) 49 ACSR 745 at [4]. I say "may" because a person may not be aggrieved by the deregistration of a company if that person has a claim directly against the insurer of the company pursuant to s 601AG of the Act: see Hutchinson v Australian Securities and Investments Commission (2001) 40 ACSR 198 at [36]. However, a Court will not refuse an application for reinstatement on this ground if there is uncertainty about the availability of such a claim: Arnold v Poltane at [8]. In the circumstances, the plaintiffs are persons who are aggrieved. 10 I now move to the second limb - is it just that CBC's registration should be reinstated? In addition to the use that might be made of the reinstatement (potential action under a professional indemnity policy), other facts and matters relevant to the exercise of the Court's discretion in determining whether to reinstate CBC include that: 1. CBC was administratively deregistered by ASIC pursuant to s 601AA of the Act following an application by the members of CBC and was not the result of a detailed inquiry into the affairs of the company: Donmastry Pty Ltd v Albarran at [5]; 2. there was no suggestion that CBC was insolvent at the time it was deregistered; 3. the principals of CBC (Mr Casagrande (dec'd) and Mr Owen) were both registered with the Building Practitioners Board from 1995, and at all relevant times, it was a requirement of the Building Act 1993 (Vic) (ss 169 and 172), that as registered building practitioners they have professional indemnity insurance; and 4. the proposed claim against CBC appears to raise a serious question to be tried, there is a possibility that CBC had insurance in relation to such a claim and all other ways of seeking relief have been exhausted: Arnold v Poltane at [4]. 11 In considering the application, I have taken into account the fact that there has been significant delay in making the application for reinstatement. Notwithstanding that delay and the fact that the plaintiffs do not yet know the name (if any) of CBC's professional indemnity insurer, I consider that it is just that CBC be reinstated. 12 The following orders will be made: 1. The defendant reinstate the registration of Combined Building Consultants Pty Ltd (ACN 067 407 943). 2. Prior to a copy of this order as authenticated being lodged with the defendant together with a completed Form 105, the plaintiffs pay the defendant's costs with respect to this proceeding fixed in the sum of $495.00. 3. The plaintiffs serve a copy of this order as authenticated on Howard Craig Owen, by posting it by pre-paid ordinary post to his last known address. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 3 May 2011