Supreme Court New South Wales Medium Neutral Citation: In the Matter of ORUgo Pty Ltd [2012] NSWSC 788 Hearing dates: 9 July 2012 Decision date: 09 July 2012 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Company re-instated Catchwords: CORPORATIONS - deregistration - reinstatement - whether order should be made for removal of director upon reinstatement Legislation Cited: (Cth) Corporations Act 2001, s 601AH(5) (Cth) Corporations Act 1989, s 574 Category: Principal judgment Parties: Hadoat Pty Ltd (First Plaintiff) Orugo Pty Ltd ACN 076 224 069 (Second Plaintiff) Orguo Pty Ltd ACN 001403354 (First Defendant) Mervyn Peter Theobald (Second Defendant) Representation: Mr Watson (Solicitor) (Plaintiffs) Mervyn Peter Theobald (Second Defendant) (in person) Robert Watson (Plaintiffs) Mervyn Peter Theobald (Second Defendant) (in person) File Number(s): 2011/ 409295 Judgment (ex tempore) 1HIS HONOUR: Pursuant to a further amended originating process filed on 28 December 2011, and amended by leave granted today, the plaintiffs Hadoat Pty Ltd and Orugo Pty Ltd ACN 076 224 069 (to which I will refer as New ORUgo) claim orders: (1) that ORUgo Pty Ltd ACN 001 403 354 (to which I shall refer as Old ORUgo) be reinstated; (2) that New ORUgo be dissolved; (3) that Mr Neville Paul Theobald be listed as Director of Old ORUgo; (4) that Mr Mervyn Peter Theobald, who has been joined as second defendant, be removed as Director; and, (5) that Old ORUgo be represented by Mr Neville Paul Theobald in the matter. So far as the fifth order sought was concerned, nothing further was said about it, and it appears to me that there is no utility, necessity or basis for it, and I consider it no further. 2The evidence on the application for reinstatement is in a less than satisfactory state, but permits the following essential findings of fact. 3Prior to 26 June 1993, Old ORUgo had two shareholders, Mr Neville Paul Theobald and his brother the second defendant Mr Mervyn Peter Theobald. Both of them were also Directors of Old ORUgo. Old ORUgo held a number of properties in Bathurst New South Wales as tenant in common with the first plaintiff Hadoat Pty Ltd (Hadoat), a company in which Neville Paul Theobald and his wife were the shareholders. 4On 26 June 1993, Old ORUgo was deregistered, pursuant to then (Cth) Corporations Act 1989, s 574, for failure or neglect to lodge documents and pay fees with the Australian Securities and Investment Commission (ASIC). Subsequently, in 1996, Neville Paul Theobald caused the incorporation of New ORUgo, with himself and Mervyn Peter Theobald as the shareholders, and himself as the sole Director. Neville Paul Theobald says that he included his brother as a shareholder, notwithstanding his inability to contact him at the time, and indeed between about 1995 and 2004, because he recognised that he had fiduciary obligations to him. The fact that he was included as a shareholder is a strong indication that there was no intention to deprive Mervyn Peter Theobald of his beneficial interest in the Bathurst properties. 5Nonetheless, between 1993 and the present, the affairs of the ORUgo companies have been conducted rather irregularly to say the least. From 1996, New ORUgo acted as if it were the registered proprietor of the interest in the Bathurst properties of which Old ORUgo had been the proprietor, notwithstanding that upon its deregistration that interest vested in ASIC. For example, leases of premises within the property to tenants were purportedly granted by Hadoat and a company described in the heading to the lease as Old ORUgo, but to which the seal of New ORUgo is affixed. 6In so far as the application seeks an order that New ORUgo be dissolved, the applicant was unable to identify any basis upon which the Court could make an order that the company be dissolved. If it is desired to have that company wound up, then a winding up application can be made. Alternatively, it may be possible to have it deregistered administratively. However, the Court cannot simply make an order that it be dissolved. 7Both Neville Paul Theobald and Mervyn Peter Theobald agree that Old ORUgo should be reinstated. ASIC has been notified of the application, and has indicated that it does not oppose the application, provided that it will consent to Old ORUgo being reinstated only by its registered number, as ACN 001 403 354 Pty Ltd, so as to avoid there being two corporations with the same name. 8Ordinarily, on an application of this kind, the Court would expect to see evidence of solvency of the company. No such evidence has been put before the Court. That said, there is evidence that it holds an interest in property at Bathurst and it is no doubt in the interests of both shareholders that it be reinstated so that it can deal with, and realise the benefits of, that property. In those circumstances, I do not regard the absence of evidence of solvency as fatal, although it is unfortunate that it has not been provided. 9Both of the persons who were, at the time of deregistration, directors are aware that if the application is successful, their roles and responsibilities will resume. 10I am satisfied that Old ORUgo's registration should be reinstated. 11So far as concerns the application that Mr Neville Paul Theobald be the director of Old ORUgo upon reinstatement, and that Mr Mervyn Peter Theobald be removed, s 601AH(5) provides that, if a company is reinstated, a person who was a Director of the company immediately before deregistration becomes a Director again as from the time when ASIC or the Court reinstates the company. Accordingly, as both Neville Paul Theobald and Mervyn Peter Theobald were Directors immediately before deregistration, both of them become a Director again upon its reinstatement. 12It was suggested that by reason of Mervyn Peter Theobald not having been involved in the administration of the company for, allegedly, a period from 1995 until about 2004, he ought not be a Director. However, the plaintiff was unable to identify any legal basis upon which the Court could make such an order, particularly in the light of the provisions of s 601AH(5). 13Moreover, the evidence indicates that whatever the position might have been before about 2005, there have been ongoing relations between the brothers since 2005, although they appear subsequently to have deteriorated and broken down. If it turns out that the affairs of the company are dead-locked or intractable, then there are various remedies available, but the summary removal of a Director as is sought in the application is not one of them. Order 14Pursuant to (Cth) Corporations Act 2001, s 601AH(2), I order that ASIC reinstate the registration of ORUgo Pty Ltd ACN 001 403 354 as ACN 001 403 354 Pty Ltd, ACN 001 403 354. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 October 2012