Thursday, April 19, 2012

Reinstatement of pre-Corporations Law (1991) companies: Part 3

In my previous post I noted that the balance of authorities consider that the Corporations Act is not the appropriate legislation for reinstatement of a company which was registered and deregistered/dissolved under pre-1991 corporations legislation.

In City West Water Limited v Mr D Investments Pty Ltd [2002] VSC 553, Senior Master Mahony of the Supreme Court of Victoria considered that the legislation applicable at the time of the deregistration / dissolution is the appropriate legislation for the reinstatement of the deregistered company (at [28]). In Armitage v HXE Limited [2010] NSWSC 1109 White J of the New South Wales Supreme Court held that on the basis of the reasoning of Senior Master Mahony in City West Water, the Companies Act 1961 (NSW) was the appropriate legislation for reinstatement of a company deregistered at the time that the Companies Act 1961 (NSW) applied.
However, one issue with the application of these Acts is that they have been repealed. For instance:
  • The Companies Act 1961 was repealed on 10 February 2010 by s3 (Schedule 1) of the Legislation Reform (Repeals No. 5) Act 2010.
  • The Companies (Victoria) Code and Companies (Application of Laws) Act 1981 were repealed in 2008.
So how can these Acts be used to reinstate a company deregistered under them?

In Armitage, White J applied the Companies Act 1961 to effect the reinstatement of a company, whereas the Companies Act 1961 had been repealed. The basis for this was that there is legislation allowing for the survival of certain parts of previous corporations legislation which is not carried over into the Corporations Act (at [9] and [10]):
9 In Baird v WJT Howes Investments Pty Ltd [2008] NSWSC 1232; (2008) 68 ACSR 485, Barrett J followed City West Water Ltd v Mr D Investments Pty Ltd [2002] VSC 553; (2002) 43 ACSR 622 in holding that where a company had been deregistered under the Companies (New South Wales) Code, the provision of that Code remained applicable to applications for reinstatement. This was by virtue of s 85 of the Corporations (New South Wales) Act 1990 (NSW) pursuant to which the Code continued to apply by its own force in relation to matters arising directly or indirectly out of matters that arose before the commencement of that Act.
10 Section 20 of the Companies (Application of Laws) Act 1981 (NSW) provided that unless the contrary intention appeared all things and circumstances appointed or created by or under the Companies Act 1961 should, subject to the Companies (New South Wales) Code, continue to have the same status, operation and effect as they would have had if the Companies (Application of Laws) Act had not been enacted.
It appears that s85 of the Corporations (Victoria) Act 1990 may allow for the survival of the Corporations (Victoria) Code to the extent that the Corporations Act does not deal with those matters. s85 provides as follows:
(1) This section provides for the national scheme laws of this jurisdiction to supersede the co-operative scheme laws, which are to continue to operate of their own force only in relation to-

(a) matters arising before the commencement of this section; and

(b) matters arising, directly or indirectly, out of such matters-

in so far as the national scheme laws or the Corporations legislation do not deal with those matters.
Unfortunately s85 is unclear in its application and scope.

In respect of the survival of the reinstatement provisions of the Companies Act 1961, the Victorian equivalent of the survival legislation for the Companies Act 1961, being the Companies (Application of Laws) Act 1981, appears to have been repealed.

It is therefore unclear how any company could be reinstated if it was dissolved under pre-1991 corporations legislation. This issue was confronted by Barrett J in Tan v ASIC [2011] NSWSC 58 in which Barrett J was asked to reinstate a company deregistered under pre-1991 corporations legislation. Barrett J noted the lack of clarity, complexity and resultant difficulties in the equivalent New South Wales provisions at [6] to [9] as follows:
6. I am bound to say, however, that I have a distinct discomfort about continuing resort to the Companies (New South Wales) Code , given that its applicability and availability rest solely on the insubstantial foundation of s 85 of the Corporations (New South Wales) Act 1990 (NSW). The Companies (New South Wales) Code is otherwise not in force following repeal of the Companies (Application of Laws) Act 1981 (NSW) by the Statute Law (Miscellaneous Provisions) Act 2008 (NSW) which was itself repealed by the Statute Law (Miscellaneous Provisions) Act 2009 (NSW). 
7. As regards a company deregistered under New South Wales companies legislation before 1 January 1991, a combination of: 
(a) transitional provisions that came into effect upon the creation of the Corporations Law of New South Wales on 1 January 1991 by the Corporations (New South Wales) Act 1990 (NSW); 
(b) insertion into the Corporations Law of New South Wales by the Company Law Review Act 1998 (Cth) of not only reinstatement provisions corresponding with those in the present s 601AH but also the particular transitional provision that became s 1362CH;
(c) non-inclusion of that s 1362CH in the Corporations Act 2001(Cth); and 
(d) the wide-ranging but sometimes very generally and imprecisely expressed transitional provisions now in force through Division 6 of Part 10.1 of the Corporations Act 2001 (Cth)   
does not seem to provide a basis for a conclusion that reinstatement of registration may be dealt with by the court and by ASIC under s 601AH of the present Corporations Act.
8. It is in my opinion desirable that Parliament enact legislation dealing in a clear and concise way with reinstatement of the registration of a company either deregistered or dissolved before 1 January 1991 under State or Territory legislation then in force. 
9. Such cases arise fairly frequently. Identification of the correct basis on which to order and effect reinstatement is not something that is remote from practical affairs. 
The take-home message here is the following:

  • Unless the issue is resolved by a Court of Appeal, it is unclear whether there is any scope for the reinstatement of a company deregistered before 1991.
  • A practitioner needs to be very careful and thorough when faced with an application to reinstate a company dissolved before 1991.

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