In the matter of PGM Wind Down Pty Limited (Deregistered) [2014] NSWSC 543

Supreme Court New South Wales

Medium Neutral Citation: In the matter of PGM Wind Down Pty Limited (Deregistered) [2014] NSWSC 543 Hearing dates: Monday, 5 May 2014 Decision date: 05 May 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Australian Securities and Investments Commission to reinstate registration company. Winding up application refused Catchwords: CORPORATIONS - registration and dissolutions - reregistration - where sought by creditor for purposes of being sued - whether company should be wound up on reinstatement - held, it should not Legislation Cited: (Cth) Corporations Act 2001, s 461, 601AH(3) Category: Interlocutory applications Parties: Rolcross Pty Ltd (in liq) ACN 003 962 490 (plaintiff) SSVM Pty Ltd ACN 143 755 079 (first defendant) PGM Wind Down Pty Ltd ACN 072 983 272 (second defendant) Australian Securities and Investments Commission (third defendant) Representation: Counsel: A G Martin (plaintiff) D Stack (second defendant) Solicitors: Champion Legal (plaintiff) Kemp Strang (second defendant) File Number(s): 2014/63717

Judgment - ex tempore 1HIS HONOUR: In its originating process filed on 28 February 2014, the plaintiff Rolcross Pty Ltd (in liquidation), claims, inter alia, an order that the third defendant Australian Securities and Investments Commission reinstate the registration of the second defendant PGM Wind Down Pty Limited, which was the subject of a voluntary deregistration in 2009, and an order pursuant to the (Cth) Corporations Act 2001, s 601AH(3), that upon its reregistration the second defendant be wound-up. Alternatively to the winding-up order, and not before me for consideration today, the plaintiff seeks an order that the second defendant pay damages to the plaintiff for unpaid rent and arrears under leases pursuant to which the second defendant occupied premises owned by the plaintiff and from which the second defendant operated a motor dealership. Part of the claim is one that the second defendant is indebted to the plaintiff for unpaid rent. 2Vince Carl Moretti, who was at the time of its deregistration was the sole director of the second defendant, does not oppose the order for its reinstatement and is willing to resume his duties as sole director. He deposes to being aware of his duties as a director, and in particular his duty to ensure that it does not continue to trade if insolvent. He deposes that if the reinstatement order is made, the second defendant will not be conducting any business, but its sole role will be to defend the proceedings. 3The Australian Securities and Investments Commission does not oppose the reinstatement of the second defendant, if certain conditions are satisfied, including that the company, if ordered to be reinstated, is wound-up and a liquidator appointed. However, ASIC has indicated that it will not be appearing in the proceedings. ASIC cannot, by offering a conditional consent, limit the orders that the Court will make, although, as I propose to depart from the terms of its consent, I will reserve leave to it for a short time to apply to set aside or vary the orders. 4It is true, as Mr Martin submits, that in the present circumstances the Court's power to make a winding-up order is supported by s 601AH(3), and one does not have to resort to any particular ground under s 461. That said, the ordinary practice on reinstatement is that a company is reinstated in the condition in which it was when it was deregistered. If that condition is to be changed - for example, that the company be wound-up when it was not in liquidation when deregulation, or vice versa - then one there should be some proper basis for such an outcome. 5In this case, while the plaintiff points to some grounds for suspecting that the company may not be solvent, none of it amounts to proof of insolvency. 6Moreover, as it seems to me, the purpose of reinstating the company is to enable it to be sued, and where there is a director willing and able to conduct the defence as a director of the company, it would be unjust to wind the company up on minimal evidence and thereby place its affairs, for the sole purpose for which it has been reinstated, in the hands of a liquidator thereby denying the director the opportunity to conduct the company's defence. 7I am unpersuaded that the company should be wound up. The court orders that: (1)Pursuant to Corporations Act, s 601AH(2), the third defendant ASIC reinstate the registration of PGM Wind Down Pty Ltd ACN 072983272 (deregistered). (2)The plaintiff lodge an official copy of this order with ASIC. (3)Leave be reserved to ASIC to apply within 14 days to set aside or vary this order.