In the matter of Bele & Company Pty Limited [2017] NSWSC 1824

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Bele & Company Pty Limited [2017] NSWSC 1824 Hearing dates: 27 November 2017 Decision date: 27 November 2017 Jurisdiction: Equity - Corporations List Before: Black J Decision: The Court orders that the Australian Securities and Investments Commission reinstate the registration of Karaoke World Sydney Pty Ltd (dereg'd) on the basis that it be wound up and a liquidator be appointed on reinstatement and that the Commission pay to the Plaintiff the sum of $193,417.38 from the property of Karaoke World Sydney Pty Ltd (dereg'd) that was vested in the Commission pursuant to s 601AD(2) of the Corporations Act 2001 (Cth). Catchwords: CORPORATIONS — Dissolution — Reinstatement – Application for order that Australian Securities and Investments Commission pay Plaintiff money held in respect of deregistered company – whether s 601AH(3)(d) of the Corporations Act 2001 (Cth) empowers Court to order Commission to pay money to Plaintiff without reinstatement of company – whether order should be made for reinstatement of company and payment of money – terms of reinstatement. Legislation Cited: - Corporations Act 2001 (Cth), ss 601AA, 601AD, 601AH Category: Principal judgment Parties: Bele and Company (Plaintiff) Australian Securities and Investments Commission (Defendant) Representation: Counsel: J Foley (Plaintiff)

Solicitors: Rockliffs Lawyers (Plaintiff) File Number(s): 2017/340673

Judgment – ex tempore (revised 28 november 2017) 1. By Originating Process filed on 10 November 2017 the Plaintiff, Bele & Company Pty Ltd ("Bele") applies for an order that the Defendant, the Australian Securities and Investments Commission ("ASIC"), pay to Bele the sum of $193,417.38, implicitly, from funds which ASIC holds in respect of Karaoke World Sydney Pty Ltd (dereg'd) ("Company"). Alternatively, Bele seeks an order, to achieve the same effect, for reinstatement of the Company pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) and that ASIC pay Bele the relevant amount pursuant to s 601AH(3)(d) of the Corporations Act. 2. ASIC has been given notice of the application and has indicated, by a standard form letter, that it does not oppose the application for reinstatement of the Company, subject to specified conditions. It is not clear whether ASIC has focused, in that letter, upon the order which is sought against it for repayment of funds held by it in respect of the Company's deregistration. Bele has also sought to give notice of this application to Ms Lin, who was a shareholder in and former director of the Company until it was deregistered, and it appears she may have been advised of the application, but may now be resident in China and has shown no interest in it. 3. The application is supported by an affidavit of Mr Brandon To sworn 9 November 2017. While that affidavit sets out events in some detail, it is possible to summarise them in short form. The Company was incorporated on 1 February 2010 and Mr To was one of the four shareholders in the Company until February 2011. In that period, the Company's business was managed by Mr Zhang, who was also a shareholder in the Company with his wife Ms Lin. It appears that, in November 2010, it was agreed, because of then difficulties in the Company's operations, that a new company, Bele, would take over the Company's business. That appears to have occurred in a somewhat informal manner, without a sale agreement or assignment of property, but there is no suggestion on the evidence before me that creditors of the Company were left unsatisfied. Bele assumed occupancy of the Company's property under that arrangement, presumably by agreement with the lessor. 4. Bele operated the business from December 2010 until 2013, when another new company was incorporated to trade the business, for reasons not explained by the evidence. It appears that, at that time, it was discovered that Mr To may have omitted to give notification of the fact that Bele had assumed the operation of the business to American Express, which provided card facilities for the Company. It appears that, from at least March 2011, amounts paid by American Express card were deposited by American Express into an account in the name of the Company, in respect of the period in which Bele was trading the business. Those amounts were individually relatively small, perhaps understandably given the nature of the relevant business, although their total, $193,417.38, is substantial. On the evidence as it stands, it appears that the Company has no claim to those amounts which were earned after Bele had assumed operation of that business. I recognise, however, that there has been no opportunity for an independent investigation of that matter, where the only party which appears before me today is Bele.