Stephen Michael Beckton v Australian Securities and Investments Commission [2007] NSWSC 780 (20 June 2007)

Last Updated: 18 July 2007

NEW SOUTH WALES SUPREME COURT

CITATION: Stephen Michael Beckton v Australian Securities and Investments Commission [2007] NSWSC 780


JURISDICTION: Equity Division
Corporations List

FILE NUMBER(S): 3247/07

HEARING DATE{S): 20/06/07

JUDGMENT DATE: 20 June 2007
EX TEMPORE DATE: 20 June 2007

PARTIES:
Stephen Michael Beckton
v
Australian Securities and Investments Commission

JUDGMENT OF: White J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable



COUNSEL:
Plaintiff: I G A Archibald
Defendant: ex parte

SOLICITORS:
Plaintiff: Aubrey Brown Partners
Defendant: ASIC


CATCHWORDS:
CORPORATIONS – Reinstatement of deregistered company under s 601AH(2) of Corporations Act 2001 (Cth) – Company deregistered for failure to lodge annual returns with ASIC – Directors liable to Commissioner of Taxation for unpaid liabilities of company – Directors entitled to exemption from liability if company wound up within fourteen days of notification of liability – Reinstatement necessary to wind up company – ASIC and Commissioner not opposed to application – Order that company be reinstated – Leave granted to plaintiff to apply to Court for company to be wound up in insolvency – Order that company be wound up in insolvency.
(Cth) Corporations Act 2001, ss 459P(2)(c) and (3), 601AH
(Cth) Income Tax Assessment Act 1936, s 222AOE

LEGISLATION CITED:
Corporations Act 2001 (Cth)
Income Tax Assessment Act 1936 (Cth)
Supreme Court (Corporations) Rules 1999 (NSW)

CASES CITED:
Application of Rade Stojic [2006] NSWSC 608; (2006) 24 ACLC 844

DECISION:
See paragraph 13 of judgment.


JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST


WHITE J

Wednesday, 20 June 2007


3247/07 Stephen Michael Beckton v Australian Securities and Investments Commission

JUDGMENT

1 HIS HONOUR: This is an application under s 601AH(2) of the Corporations Act 2001 (Cth) for the reinstatement of Usave Home Loans Pty Limited ACN 097 995 152. The application is made by the former directors of that company. They also seek an order for the company to be immediately wound up in insolvency.

2 The company was deregistered on 28 January 2007 pursuant to s 601AB of the Corporations Act. That is, it was deregistered by the Australian Securities and Investments Commission (ASIC) for failure to lodge the required returns.

3 The present application is prompted by the service on the directors of a notice from the Deputy Commissioner of Taxation under s 222AOE of the Income Tax Assessment Act 1936 (Cth) that the directors are liable to pay the Commissioner an amount equal to the amounts of unpaid PAYG withholding amounts which the company failed to remit. The amounts withheld and not remitted relate to periods between 1 April 2002 and 31 March 2004.

4 The directors’ liability to the penalty in amounts equal to the unpaid amounts of such liability will be remitted if, at the end of 14 days after service of the notice, the company is under administration within the meaning of the Corporations Act or it is being wound up (s 222AOE(b)(iii) and (iv)). That 14-day period expires today.

5 The circumstances of this application are not relevantly different from those I considered in Application of Rade Stojic [2006] NSWSC 608; (2006) 24 ACLC 844. As in that case, the only person with an interest in opposing the application is the Deputy Commissioner of Taxation. As in that case, the Deputy Commissioner does not oppose the application for reinstatement. It is not immediately apparent why the Deputy Commissioner takes that view on applications of this kind, but in the absence of opposition from the Deputy Commissioner of Taxation I do not think it appropriate for me to speculate on arguments which might be available to the Deputy Commissioner to oppose the application.

6 It still remains necessary for the applicants to satisfy me that reinstatement of the company for the purposes of it being immediately wound up is just. The plaintiffs are clearly persons aggrieved by the deregistration.

7 In Application of Rade Stojic, I observed that the policy of the Income Tax Assessment Act is to ensure that, if companies do not meet their obligations to remit moneys to the Deputy Commissioner, the companies be placed into external administration, and that the policy appears to be that that should be done up to the expiry of 14 days after the service of the notice under s 222AOE (at 847 [14]).

8 Whilst the failure of the directors to cause the company to be wound up when it ceased to carry on business notwithstanding its insolvency is troubling, the company's deregistration appears to have come about as a result of the failure of the directors’ accountants to notify ASIC of the change of their address. Their failure to place the company into external administration will be rectified by the winding-up order which is sought.

9 For the same reasons as the Application of Rade Stojic, it is just that in this case the company be reinstated with a view to its being wound up. The company is clearly insolvent. It has not traded for some years. It is appropriate to dispense with the notices and advertisements for the winding-up application.

10 The originating process and supporting affidavits were not served on ASIC until this morning and notice of the application was given to ASIC yesterday. I am informed, and I accept, that the plaintiffs’ solicitor has been advised that ASIC does not oppose the application. The plaintiffs’ solicitor offers an undertaking to pay any fees of ASIC associated with its consideration of the application for reinstatement.

11 I do not consider that there has been compliance with rule 2.8(3) of the Supreme Court (Corporations) Rules 1999 (NSW), but in the circumstances, and noting the undertaking of the plaintiffs’ solicitor, I will make an order dispensing with the operation of that rule.

12 I grant leave to the plaintiffs to the extent required to apply pursuant to subs 459P(3) for an order that the company be wound up. Alternatively, on the order for reinstatement being made, such leave could be given pursuant to s 459P(2)(c).

13 For those reasons I order:

1. That the requirement under r 2.8(3) of the Supreme Court (Corporations) Rules that documents specified by that rule be served on the Australian Securities and Investments Commission within a reasonable time before the hearing be dispensed with.

2. I make orders in accordance with paragraphs 4, 5, 6, 7 and 8 of the originating process.

3. These orders may be entered forthwith.

4. I note the undertaking of the plaintiffs’ solicitor, Mr Peach, to pay any fees of the Australian Securities and Investments Commission associated with the application for reinstatement of the company.


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LAST UPDATED: 17 July 2007