Gorczynski v W & FT Osmo Pty Limited [2020] NSWSC 1363

Supreme Court New South Wales

Medium Neutral Citation: Gorczynski v W & FT Osmo Pty Limited [2020] NSWSC 1363 Hearing dates: 7 October 2020 Date of orders: 7 October 2020 Decision date: 07 October 2020 Jurisdiction: Common Law Before: Bellew J Decision: (1) Pursuant to section 601AH of the Corporations Act 2001 (Cth) I order that the Australian Securities and Investments Commission reinstate the registration of the defendant company W & FT Osmo Pty Ltd. (2) Pursuant to section 486 of the Corporations Act 2001 (Cth) I make an order for the inspection of the books of the defendant company by the plaintiff. (3) I stand the balance of the notice of motion over for further hearing until Wednesday 28 October 2020 at 9.30am. Catchwords: CORPORATIONS – Where the District Court entered default judgment in favour of the plaintiff with an order that damages be assessed – Where the defendant company was deregistered – Whether an order should be made that ASIC reinstate the registration of the defendant company – Where plaintiff was a person aggrieved by the deregistration – Whether an order should be made for the inspection of the books of a company by creditors and contributories – Where the plaintiff was a creditor – Orders made Legislation Cited: Corporations Act 2001 (Cth) Category: Procedural and other rulings Parties: Peter Francis Gorczynski – Plaintiff W & FT Osmo Pty Limited – Defendant Representation: Plaintiff - Self File Number(s): 2008/289619 Publication restriction: Nil

Judgment – EX TEMPORE (REVISED) 1. Before the Court is a notice of motion filed on 4 September 2020 in which the plaintiff in these proceedings seeks orders in the following terms: 1. An order pursuant to section 601AH(2) of the Corporations Act 2001 requiring the Australian Securities and Investments Commission ("ASIC") to reinstate the registration of the Defendant company. 2. An order pursuant to section 601AH(3) of the Corporations Act 2001 validating anything done during the period beginning when the company was deregistered and ending when the company's registration was reinstated. 3. An order pursuant to section 459A(1)(b) and 459A(2)(a) of the Corporations Act 2001 granting leave for the Plaintiff to make an application pursuant to section 459P of the Corporations Act 2001 for the Defendant company to be wound up. 4. An order pursuant to section 459P of the Corporations Act 2001 that the defendant company be wound up by a liquidator appointed by the Court. 5. An order pursuant to section 471B of the Corporations Act 2001 granting leave for the Plaintiff to continue proceedings against the Defendant company. 6. An order pursuant to section 486 of the Corporations Act 2001 allowing the plaintiff to inspect the company's books. 7. Any other order that the Court considers appropriate. 1. The evidence in support of the notice of motion is contained in a Court Book which has been assembled and provided to the Court by the plaintiff who has appeared today on his own behalf. 2. The history of these proceedings can be shortly stated. 3. The plaintiff commenced proceedings in the District Court in 2006 against the defendant, W & FT Osmo Pty Ltd, in which he alleged that the defendant had breached its duty of care to him in issuing certificates which had the effect of retrospectively authorising the construction of a building on a property neighbouring that of the plaintiff. The defendant elected not to defend the proceedings and the District Court entered default judgment in favour of the plaintiff, with an order that his damages be assessed. 4. Because of the assertion that any damages would exceed the then jurisdictional limit of the District Court of $750,000.00, the proceedings were transferred to this Court on 17 November 2008. Since that time various applications brought by the plaintiff, including an application for preliminary discovery, have failed. It appears that what the plaintiff is seeking to do is to establish that at the material time the defendant company was trading whilst it was insolvent in an attempt to establish personal liability on the part of its two directors (who are now deceased). 5. The evidence before the Court establishes that the defendant company was deregistered by the Australian Securities and Investments Commission (ASIC) on 18 February 2019. Documents obtained from ASIC, which appear at page 18 of the Court Book, nominate the reason for that deregistration as stemming from section 601AB of the Corporations Act 2001 (Cth) (the Act). That section gives power to ASIC to deregister a company in a number of different circumstances, including where a response to a return is not provided within six months. The precise reason for deregistration of the defendant remains unclear. 6. A letter under the hand of Paul Lettoof, a compliance officer with ASIC, is also in evidence at page 7 of the Court Book, in which Mr Lettoof advised that ASIC would not oppose an application for reinstatement of the company, providing certain conditions were satisfied. Needless to say, the Court is not bound by any conditions that ASIC may seek to impose in relation to any order that might be made. 7. Section 601AH of the Act gives the power to the Court to make an order that ASIC reinstate the registration of a company if an application for reinstatement is made to the Court by, amongst other persons, a person aggrieved by the deregistration. I am satisfied that the plaintiff falls within that definition. In order to make the order the Court must also be satisfied under section 601AH(2)(b) that it is just that the company's registration be reinstated. I am satisfied that that requirement has been made out, in circumstances where, on the evidence before me, the plaintiff has a judgment against the company. 8. Under section 486 of the Act the Court may make an order for the inspection of the books of a company by creditors and contributories. The power of the Court to make that order is wide, and is based upon the Court being satisfied that the order is "just". In the circumstances that I have outlined, I am satisfied that the interests of justice are served by the making of such an order. 9. However, the orders sought by the plaintiff go beyond those matters. In particular, the plaintiff seeks an order under s 459A of the Act which is in the following terms: 459A Order that insolvent company be wound up in insolvency On an application under section 459P, the Court may order that an insolvent company be wound up in insolvency. 1. Section 459P of the Act is in the following terms: Who may apply for order under section 459A (1) Any one or more of the following may apply to the Court for a company to be wound up in insolvency: (a) the company; (b) a creditor (even if the creditor is a secured creditor or is only a contingent or prospective creditor); (c) a contributory; (d) a director; (e) a liquidator or provisional liquidator of the company; (f) ASIC; (g) a prescribed agency. (2) An application by any of the following, or by persons including any of the following, may only be made with the leave of the Court: (a) a person who is a creditor only because of a contingent or prospective debt; (b) a contributory; (c) a director; (d) ASIC. (3) The Court may give leave if satisfied that there is a prima facie case that the company is insolvent, but not otherwise. (4) The Court may give leave subject to conditions. (5) Except as permitted by this section, a person cannot apply for a company to be wound up in insolvency. 1. In my view, the plaintiff does not fall within the categories of those persons who may apply for an order under s 459A(1). Whilst he does fall within s 459P(2)(a), a person in that category can only bring an application for an order under s 459A with the leave of the Court. The Court may give leave only if it is satisfied that there is a prima facie case that the company is insolvent. 2. In terms of evidence of the defendant's insolvency, the plaintiff points to a letter dated 4 July 2006 from Denes Ebner Solicitors, who then acted for the defendant in the proceedings in the District Court. [1] That letter asserted, amongst other things: "We have been instructed to advise as follows: - … (2) Our client is insolvent and is to be wound up". 1. There may be an issue about whether that assertion constitutes evidence establishing a prima facie case of insolvency as required by s 459P(3). I have not come to a concluded view in relation to that issue. Having indicated to the plaintiff that I was minded to make the orders sought under ss486 and 601AH, the plaintiff indicated that he wished to pursue the issue of insolvency further, with a view to providing additional evidence. 2. These proceedings have a long, and some might say tortuous, history. It is important that they be prosecuted with due diligence. However, in the circumstances I am prepared to give the plaintiff a short opportunity to consider the issue of insolvency further before finally determining his application for an order pursuant to s 459A of the Act. 3. For those reasons, I make the following orders: 1. Pursuant to section 601AH of the Corporations Act 2001 (Cth) I order that the Australian Securities and Investments Commission reinstate the registration of the defendant company W & FT Osmo Pty Ltd. 2. I order pursuant to section 486 of the Corporations Act 2001 (Cth) for the inspection of the books of the defendant company by the plaintiff. 3. I stand the balance of the notice of motion over for further hearing until Wednesday 28 October 2020 at 9.30am.