Moon v ASIC [2002] NSWSC 885

Reported Decision : 43 ACSR 125

New South Wales Supreme Court

CITATION : Moon v ASIC [2002] NSWSC 885 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 4707/02 HEARING DATE(S) : 19 & 20 September 2002 JUDGMENT DATE : 20 September 2002

PARTIES : Rodney Moon (P) Australian Securities and Investments Commission (D) JUDGMENT OF : Hamilton J

COUNSEL : J K Chippindall (P) Ex parte SOLICITORS : McCabe Terrill (P) No appearance (D) CATCHWORDS : CORPORATIONS [188] - Receivers, managers and controllers - Appointment of receiver - By Court - Ex parte application - Circumstances when granted LEGISLATION CITED : Corporations Act (Cth) 2001 s 601AH CASES CITED : National Australia Bank Limited v Bond Brewing Holdings Limited (1990) 169 CLR 271 DECISION : Receiver appointed ex parte for short time; on notice given appointment extended until further order.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

FRIDAY, 20 SEPTEMBER 2002

4707/02 RODNEY MOON v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION JUDGMENT 1 HIS HONOUR: Yesterday afternoon I took the very unusual step of appointing a receiver of a company ex parte, a course which the High Court has warned in National Australia Bank Limited v Bond Brewing Holdings Limited (1990) 169 CLR 271 should be followed only in quite exceptional circumstances. 2 These proceedings originated as an application under s 601AH of the Corporations Act (Cth) 2001 ("the CA") for reinstatement to the register of a company which had been deregistered by ASIC for non compliance with its obligations to file returns. Applications under s 601AH are quite common. They are generally made in the case of companies which have gone out of existence and which it is necessary to resuscitate for the purpose of their being sued to activate the cover of insurance policies which covered their activities whilst they were trading. The very unusual feature of this case is that this deregistered company is not moribund or defunct, although it was administratively deregistered. It is not at the moment certain that it is very well, but it is undoubtedly conducting the business of a bowling club at Paddington which was, and still is, in full swing. Upon realising that the company had been deregistered the directors took some steps to achieve its reregistration by ASIC through administrative process, but this failed. ASIC refused to reregister it because of certain irregularities that had occurred, in particular, as I understand it, irregularities concerning the appointment of an auditor. 3 The Court was therefore faced with the very unusual situation of a company which was non existent, but trading away. In the proceedings, as they were brought before me yesterday, ASIC was named as the only defendant. The usual practice was adopted in that ASIC's attitude to the reinstatement was indicated to the Court by letter to save the cost of court attendance on its behalf. The letter raised no objection to the company's reinstatement. It required the payment of the usual $434 for ASIC's costs as a condition of the reinstatement. But, in view of the unusual situation, it also required the appointment of a receiver and manager of the company as a condition of its consent to reinstatement of the company. 4 I was therefore faced with the unusual circumstances of a requirement by ASIC that a receiver and manager be appointed if the company were to be reinstated, and a non existent company trading. I could immediately have appointed a receiver or given leave to file the originating process returnable today, which would have delayed the situation only by a day. But I should still at that time have faced the condition which ASIC imposed (and reasonably imposed) that the company could be reinstated. so far as it was concerned, only if a receiver and manager were appointed. In those circumstances, I decided on the ex parte application yesterday in effect to combine those two courses of action. In the very unusual circumstances, I immediately appointed Mr A H J Wily receiver and manager, his appointment to take effect upon reinstatement of the company to the Register, but I made that order only up to and including today and made the originating process returnable today. 5 The plaintiff is one of the four present directors of the company. I did not yesterday direct that the company be joined as a defendant, but I did direct that the directors other than the plaintiff be informed overnight that the matter was before the Court at 2 o'clock today. They were not summoned to attend, but they were invited to attend and make any application they were minded to on their own or the company's behalf. The evidence brought before me today shows that the three directors other than the plaintiff were in fact informed of the appointment of Mr Wily as receiver and manager and that the matter was again before the Court this afternoon. They were also invited to attend and make such application as they might be advised. 6 The disorder that this company is in, albeit still trading, is to my mind demonstrated by the fact that none of the directors has himself or herself appeared, or caused the company to appear, before the Court, although they are in this bizarre situation of actively carrying on the trading of a defunct company. In those circumstances, on the evidence laid before me today, I have no hesitation in appointing Mr Wily receiver and manager until further order. I think that liberty to apply should be reserved, lest the company or its directors gather themselves together and seek to take some action at some stage, but I do not see why further short term orders should be made, which will lead to unnecessary repetition of applications on the plaintiff's part. I shall today make an order for definition of Mr Wily's powers as receiver and manager and, bearing in mind the ongoing business, I have granted him ample powers, being virtually all the powers prescribed in the CA, not only for receivers, but also for liquidators, save for the power to take steps finally to wind the company up. That seemed to me appropriate in the circumstances. 7 I direct that the plaintiff on or before 24 February 2002 file an amended summons joining the company as a second defendant and omitting from prayer 3 the words "pending hearing of this application". The second defendant shall be served with the amended summons and notice of the date to which these proceedings are adjourned on or before 27 September 2002. I stand the matter over to the Corporations Law Master's list on 8 October 2002. I direct that these orders be entered forthwith. **********