FEDERAL COURT OF AUSTRALIA James v Leighton Holdings Limited [2013] FCA 1115 Citation: James v Leighton Holdings Limited [2013] FCA 1115 Parties: THOMAS JAMES v LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) and LEIGHTON SUPERANNUATION PTY LIMITED (ACN 001 002 035) IN ITS CAPACITY AS TRUSTEE OF THE LEIGHTON SUPERANNUATION FUND File number: NSD 1688 of 2013 Judge: WIGNEY J Date of judgment: 23 October 2013 Catchwords: CORPORATIONS LAW – Application for reinstatement of a deregistered company Legislation: Corporations Act 2001 (Cth) Cases cited: ACCC v ASIC (2000) 174 ALR 688 Arnold v Poltane Pty Ltd [2005] FCA 1418 Arnold World Trading Proprietary Limited v ACN 133 427 335 Proprietary Limited (2010) 80 ACSR 670 Wedgewood Hallam Proprietary Limited v Australian Securities and Investments Commission [2011] FCA 439 Date of hearing: 23 October 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 24 Counsel for the Applicant: Mr L T Livingston Solicitor for the Applicant: Maurice Blackburn Counsel for the Respondents: Mr J R Williams Solicitor for the Respondents: Herbert Smith Freehills IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1688 of 2013 BETWEEN: THOMAS JAMES Applicant AND: LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) First Respondent LEIGHTON SUPERANNUATION PTY LIMITED (ACN 001 002 035) IN ITS CAPACITY AS TRUSTEE OF THE LEIGHTON SUPERANNUATION FUND Second Respondent JUDGE: WIGNEY J DATE OF ORDER: 23 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 601AH(2) of the Corporations Act, the Australian Securities and Investments Commission reinstate the registration of Leighton Superannuation Proprietary Limited. 2. The costs of the interlocutory application filed on 12 September 2013 be costs in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1688 of 2013 BETWEEN: THOMAS JAMES Applicant AND: LEIGHTON HOLDINGS LIMITED (ACN 004 482 982) First Respondent LEIGHTON SUPERANNUATION PTY LIMITED (ACN 001 002 035) IN ITS CAPACITY AS TRUSTEE OF THE LEIGHTON SUPERANNUATION FUND Second Respondent JUDGE: WIGNEY J DATE: 23 OCTOBER 2013 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By interlocutory application filed on 12 September 2013, the applicant, Thomas James, seeks an order pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Corporations Act) that the Australian Securities and Investments Commission (ASIC) reinstate the registration of Leighton Superannuation Proprietary Limited (the Company). 2 Section 601AH(2) of the Corporations Act relevantly provides as follows: 601AH(2) Reinstatement by Court. 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 The applicant's application for reinstatement of the Company is supported by evidence contained in two affidavits that have been filed and read in these proceedings. They are; firstly, the affidavit of Michael John Doherty dated 12 September 2013, and secondly, the affidavit Hanna Schutz dated 3 October 2013. 4 By letter dated 18 September 2013 sent to the applicant's solicitors (annexure HS-1 to the affidavit of Ms Schutz) ASIC has indicated that it will not oppose the application for reinstatement if three conditions are satisfied. Those conditions, which are set out in the letter, are as follows: (1) The order for reinstatement is in terms of section 601AH(2) of the Act, requiring ASIC to reinstate the registration of the company; (2) The applicant notifies the former officeholder/s of the company of this application; and (3) The Court order is lodged with ASIC so that ASIC can reinstate the company. 5 In relation to the first of the conditions referred to in the ASIC letter, I am satisfied that the order that the applicant seeks is in terms of s 601AH(2). In relation to the second condition, there is evidence that two persons who were directors of the Company immediately prior to deregistration have been notified of the application. That evidence is contained in letters from the applicant's solicitors to Carlos Mendes and Ashley Moir. Those letters, both of which are dated 11 September 2011, are annexed to Mr Doherty's affidavit. Mr Doherty's evidence in his affidavit is that there has been no response to those letters. There is evidence in the form of an ASIC historical extract that demonstrates that those two gentlemen, Mr Mendes and Mr Moir, were the directors of the Company immediately prior to its deregistration. 6 In relation to the third condition set out in the ASIC letter, lodgement of the order is obviously a matter that can only be attended to once an order under s 601AH(2) is made. No doubt that is a matter that the applicant will attend to if the order is made so that ASIC can then take steps to reinstate the Company's registration in accordance with the order. 7 I note also that the first respondent to the application, Leighton Holdings Limited, which was the parent company of the Company, does not oppose the application other than in relation to the appropriate costs order. That is evidenced by a letter annexed to Ms Schutz's affidavit. Mr Williams of counsel appeared for the first respondent on the hearing of the application today and confirmed that there was no opposition to the application by the first respondent other than in relation to costs. 8 Despite the fact that the application for reinstatement is not opposed, it is clear from the terms of s 601AH(2) of the Corporations Act that before a reinstatement order is made, the Court must be satisfied of two things: first, that the applicant is a person aggrieved by the deregistration; and second, that it is just that the Company's registration be reinstated. For the reasons that follow, on the evidence before the Court, I am satisfied of both of those matters. 9 In relation to the first of those conditions, a person aggrieved is a person who has a: ...genuine grievance that the dissolution of the company affected his or her interests because, for example, a right of some value or potential value has gone out of existence. See Arnold World Trading Proprietary Limited v ACN 133 427 335 Proprietary Limited (2010) 80 ACSR 670 at [43], a judgment of Barrett J in the New South Wales Supreme Court, citing the decision of Austin J in ACCC v ASIC (2000) 174 ALR 688 at [24]-[26]. 10 It is clear from the authorities that Mr Livingston, counsel for the applicant, has referred me to today that a claim or cause of action that a person has against a company may be a "right of some potential value". Here, the evidence demonstrates that the applicant has a claim against the Company that has, or may have, some potential value. 11 It is unnecessary to go into any detail in relation to the nature of the applicant's claim. Suffice it to say that, by Originating Application filed on 20 August 2013, the applicant claims relief against both the Company and the first respondent, including damages in an amount alleged to be in excess of $10 million. The grounds for that relief are set out in a Statement of Claim also filed on 20 August 2013. 12 In very brief terms, the Statement of Claim pleads that, from 3 June 1985 until 31 July 2009, the applicant was an employee of Leighton Contractors Pty Limited. Leighton Contractors was a wholly-owned subsidiary of the first respondent. The Company was, at all relevant times, the trustee of the Leighton Superannuation Fund. That fund was administered by the first respondent. The applicant was initially a member of the "defined benefits" section of the fund, an important feature of which was that any retrenchment benefit would be determined by a formula based on the employee's salary near retrenchment. 13 The applicant, in brief terms, alleges that, by letter dated 17 September 1993, together with documents enclosed with that letter, the first and second respondents invited him to transfer from the defined benefit section of the fund to a new "accumulated benefits section". It was represented in that correspondence and its enclosures, so it is alleged, that any benefit payable to the applicant on retrenchment under the accumulated benefits section would be not less than an amount that would have been paid or payable under the defined benefits section. It is also alleged that, in reliance on that statement or representation as pleaded, which is referred to in the pleadings as the "benefits guarantee", the applicant transferred to the accumulated benefits section of the fund. 14 The applicant ceased employment with the Leighton Group on 31 July 2009 when his position became redundant. It is alleged by the applicant that the respondents have failed to honour the so-called benefits guarantee and, as a result, the respondents are liable for damages for breach of contract, negligent misstatement, misleading and deceptive conduct, and unconscionable conduct, under, respectively, the Australian Securities and Investments Commission Act 2001 (Cth) and the Trade Practices Act 1974 (Cth). There is also a pleading in estoppel and a discrete pleading against the Company for breach of trust. As I have said in relation to the relief claimed, it includes damages, assessed in various ways depending on the particular cause of action, which are alleged to exceed $10 million. 15 It is readily apparent that the applicant's claim against the respondents, including the Company, is potentially valuable, and that he is aggrieved because deregistration of the Company has affected his ability to pursue the claim against the Company. In short, if the Company is not reinstated, the applicant cannot pursue the claim against the Company because it doesn't exist. As a result, I am satisfied that the applicant is a person aggrieved and the first limb of s 601AH(2) is satisfied. 16 The authorities in relation to the second limb of s 601AH(2) are briefly and conveniently summarised in the decision of Gordon J in Wedgewood Hallam Proprietary Limited v Australian Securities and Investments Commission [2011] FCA 439 (Wedgewood Hallam). The requirement that the Court be satisfied that it is just that the Company's registration be reinstated effectively gives the Court a broad and essentially unfettered discretion. The authorities referred to by Gordon J indicate that the following matters may be relevant considerations in terms of the discretion in the second limb of s 601AH(2). 17 First, the circumstances of the company's deregistration may be a relevant consideration. If the company is administratively deregistered by ASIC pursuant to s 601AA, that will tend to militate towards reinstatement. That is the situation here, as evidenced by the application for deregistration which is annexed to Mr Doherty's affidavit. 18 A second consideration is whether the company was insolvent at the time of deregistration. If not, that will tend to militate towards reinstatement. Here, the evidence indicates that the Company was not insolvent at the time of deregistration. That is apparent from the deregistration form that was lodged by the Company with ASIC, which indicates that, at the time of deregistration, in accordance with the requirements of s 601AA of the Corporations Act, there were no outstanding claims against the Company, and no outstanding liabilities. 19 A third relevant consideration is whether any person would be prejudiced by the reinstatement. If not, that would tend to militate towards reinstatement. There is no evidence or suggestion that anyone would suffer any prejudice as a result of reinstatement. 20 Fourth, where the application to reinstate is based on a claim against the company, if it appears that there is a serious question to be tried, that would tend to militate towards reinstatement, and would demonstrate that reinstatement would have some utility. Here, it is sufficient to say that the Statement of Claim appears to raise a serious issue to be tried, though, to date no Defence has been filed by the respondents and no evidence has been filed by the applicant in support of the claim. 21 I note also that the evidence indicates that the applicant has no information at all as to the availability of any insurance that may have been held by the second respondent. If there was evidence that the Company had an insurance contract that covered the potential liability to the applicant, that may be a relevant consideration given the terms of s 601AG of the Corporations Act, which provides a direct right of action against the insurer in such circumstances. However, the Court will generally not refuse an application for reinstatement where there is uncertainty about the availability of such a claim: Wedgewood Hallam at [9]; Arnold v Poltane Pty Ltd [2005] FCA 1418 at [8]. That is the position here. 22 Taking each of the matters to which I have referred into account, I am satisfied that it is just that the Company's registration be reinstated. It follows that both limbs of s 601AH(2) have been made out and I accordingly propose to make an order in accordance with that section. 23 In relation to costs, in my opinion, the appropriate order is that the costs of the application be costs in the cause. As Mr Williams submitted on behalf of the first respondent, despite the fact that the application was not opposed by either ASIC or the first respondent, it remained a matter in respect of which the Court was required to be satisfied. Secondly, in the correspondence between the applicant and the first respondent the question of costs remained a live issue. In the interlocutory application itself, the order sought is that the respondents pay the applicant's costs of and incidental to the interlocutory application. Ultimately the applicant did not press that order, but sought an order that the costs be the applicant's costs in the cause. In my opinion it was reasonable for the first respondent to retain counsel and appear on this application today, given that costs were a live issue, and given that it remained necessary for the Court to be satisfied of the two criteria in s 601AH(2). Accordingly, it would seem appropriate that if the respondents are ultimately successful in their defence of the claim, they should be able to recover the costs of this application. For that reason, I consider that the appropriate order is that costs of the application be costs in the cause. 24 Accordingly, the orders I make are first, an order pursuant to s 601AH(2) of the Corporations Act, that the Australian Securities and Investments Commission reinstate the registration of Leighton Superannuation Proprietary Limited. Second, the costs of the interlocutory application filed on 12 September 2013 be costs in the cause. I direct that the orders be entered forthwith. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney. Associate: Dated: 23 October 2013