FEDERAL COURT OF AUSTRALIA Australian Competition and Consumer Commission v Australian Securities and Investments Commission, in the matter of SensaSlim Australia Pty Limited (In Liquidation) [2015] FCA 258 Citation: Australian Competition and Consumer Commission v Australian Securities and Investments Commission, in the matter of SensaSlim Australia Pty Limited (In Liquidation) [2015] FCA 258 Parties: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION and TRAJAN JOHN KUKULOVSKI File number(s): NSD 193 of 2015 Judge(s): YATES J Date of judgment: 9 March 2015 Catchwords: CORPORATIONS – reinstatement of company registration – whether appropriate exercise of discretion to reinstate company registration where company clearly insolvent – reinstatement ordered in the particular circumstances of the case Legislation: Corporations Act 2001 (Cth) s 601AA, 601AH Trade Practices Act 1974 (Cth) Cases cited: Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688 Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 5) (2014) 98 ACSR 347 Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 6) [2014] FCA 1035 JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu (2008) 167 FCR 212 Date of hearing: 9 March 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 9 Counsel for the Plaintiff: Mr S White SC with Ms K Morgan Solicitor for the Plaintiff: Corrs Chambers Westgarth Counsel for the First Defendant: The first defendant did not appear Counsel for the Second Defendant: The second defendant filed a submitting appearance IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 193 of 2015 IN THE MATTER OF SENSASLIM AUSTRALIA PTY LIMITED (IN LIQUIDATION) BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Plaintiff AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Defendant TRAJAN JOHN KUKULOVSKI Second Defendant JUDGE: YATES J DATE OF ORDER: 9 MARCH 2015 WHERE MADE: SYDNEY THE COURT NOTES: 1. The consent of Trajan John Kukulovski of Jirsch Sutherland Chartered Accountants, Level 4, 533 Little Lonsdale Street, Melbourne VIC 3000 to act as the liquidator of SensaSlim Australia Pty Limited (in liquidation) (the company). THE COURT ORDERS THAT: 2. Pursuant to s 601AH(2) of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission reinstate the registration of the company. 3. Trajan John Kukulovski, the former liquidator of the company, be appointed as liquidator of the company upon reinstatement of its registration. 4. All steps purportedly taken by the plaintiff in respect of the company in proceeding NSD1163 of 2011 in the period from 22 June 2014 to the date on which the company's registration is reinstated be deemed to have been taken against the company as if it had not been deregistered in the said period and had continued in existence. 5. There be no order as to costs. 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 193 of 2015 IN THE MATTER OF SENSASLIM AUSTRALIA PTY LIMITED (IN LIQUIDATION) BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Plaintiff AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Defendant TRAJAN JOHN KUKULOVSKI Second Defendant JUDGE: YATES J DATE: 25 MARCH 2015 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application brought under s 601AH(2) of the Corporations Act 2001 (Cth) (the Corporations Act) for an order that the registration of SensaSlim Pty Limited (in liquidation) (the company) be reinstated. 2 The company is named as first respondent in proceeding NSD 1163 of 2011 (the 2011 proceeding) commenced by the plaintiff, the Australian Competition and Consumer Commission, for contraventions of the Trade Practices Act 1974 (Cth) (the Trade Practices Act) and the Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) (the Australian Consumer Law) by the company and a number of personal respondents. On 8 April 2014, I published reasons for judgment in which I found that the company and certain of the personal respondents had contravened the Trade Practices Act and the Australian Consumer Law in a number of respects: Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 5) (2014) 98 ACSR 347. 3 On 26 September 2014, on the application of the plaintiff, as applicant in the 2011 proceeding, I granted a number of declarations in respect of those contraventions: Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 6) [2014] FCA 1035. The plaintiff, as applicant in the 2011 proceeding, now seeks a pecuniary penalty against the company. The hearing for that relief has been listed to commence today. 4 Unbeknown to the plaintiff, until relatively recently, and the Court, the company was deregistered on 22 June 2014 on the application of its then liquidator, even though the company remained a party to the 2011 proceeding: s 601AA(2)(f) of the Corporations Act. The liquidator acknowledges that his application to deregister the company was undertaken in error. The defendant, the Australian Securities and Investments Commission, does not oppose the reinstatement of the company's registration, and has not appeared at the hearing of the application. I am satisfied that, in the circumstances I have outlined, the plaintiff is a person who is aggrieved by the deregistration and has standing to seek an order for the reinstatement of the company's registration: s 601AH(2)(a)(i). 5 Subject to one matter, I am satisfied that it is appropriate to order the defendant to reinstate the company's registration. The matter of concern relates to the fact that the purpose of reinstating the company's registration is so that the plaintiff can pursue its claim to a significant pecuniary penalty ($6.6 million) against the company, when it is clearly insolvent. 6 In Australian Competition and Consumer Commission v Australian Securities and Investments Commission (2000) 174 ALR 688, Austin J (at [40]-[45]) raised the question of whether it would be an appropriate exercise of discretion to reinstate a company's registration in such circumstances; that is, where it might be futile to order the company to pay such a penalty. As events transpired, his Honour adopted the course of ordering the reinstatement, leaving open the possibility for the court hearing the question of penalty (in that case, this Court) to determine the appropriateness of that relief in all the circumstances. 7 In my view, that is the course to be adopted in the present case. There are questions of public interest involved in seeking a pecuniary penalty against a company that has contravened the Trade Practices Act and the Australian Consumer Law, which transcend the position of the company itself as a contravener. Those matters should be ventilated and determined in the penalty proceeding rather than in the reinstatement proceeding. 8 Upon reinstatement, the company will resume its status as a company in liquidation. However, it will be necessary to appoint a liquidator: JP Morgan Portfolio Services Ltd v Deloitte Touche Tohmatsu (2008) 167 FCR 212. The previous liquidator, Mr Kukulovski, is prepared to resume his position as liquidator. He seeks no provision for his costs of doing so. He has given a written consent to act: Exhibit B. In my view, it is clearly desirable that Mr Kukulovski be re-appointed. 9 Orders will be made accordingly. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 25 March 2015