Queensland Building Services Authority v Dragonstone Pty Ltd
[2004] QDC 78
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- Unreported Judgment
- Queensland Building Services Authority v Dragonstone Pty Ltd[2004] QDC 78
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Queensland Building Services Authority v Dragonstone Pty Ltd[2004] QDC 78
Queensland Building Services Authority v Dragonstone Pty Ltd[2004] QDC 78
DISTRICT COURT OF QUEENSLAND
CITATION: | Queensland Building Services Authority v Dragonstone Pty Ltd [2004] QDC 078 |
PARTIES: | QUEENSLAND BUILDING SERVICES AUTHORITY Appellant v DRAGONSTONE PTY LTD Respondent |
FILE NO/S: | BD3046/03; M12059/02 |
DIVISION: |
|
PROCEEDING: | Appeal |
ORIGINATING COURT: | Magistrates Court, Brisbane |
DELIVERED ON: | 21 April 2004 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 14 April 2004 |
JUDGE: | McGill DCJ |
ORDER: | Appeal allowed with costs, order of magistrate set aside, in lieu thereof respondent’s application dismissed with costs. |
CATCHWORDS: | CORPORATIONS LAW – Reinstatement – effect of order for reinstatement – company in existence for all purposes. PRACTICE – Application – title and contents of form – term “applicant” not to be used if proceeding started by claim. Corporations Law s 601AH. Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559 – followed. |
COUNSEL: | A D McKinnon for the appellant M J Byrne for the respondent |
SOLICITORS: | QBSA Legal Services Hatzis Lawyers for the respondent |
- [1]The respondent company was deregistered under the Corporations Act 2001 on 9 April 1999. On 28 March 2001 the Chief Justice made an order pursuant to s 601AH of the Corporations Act 2001 that, “Dragonstone Pty Ltd be restored to the register for the purpose of action Linda Wood v Dragonstone Pty Ltd in the District Court held at Brisbane Plaint number 2997 of 1998.” I have to decide in effect whether that order took effect according to its terms, or whether the effect of that order was that the company was restored to the register for all purposes, not just for the purpose of that particular action.
- [2]That question arose in the following way. On 2 September 2002 the appellant authority filed a claim and statement of claim in the Magistrates Court seeking to recover from the respondent an amount not exceeding $50,000 alleged to have been paid out by the appellant, pursuant to an insurance policy issued under the Builders’ Registration and Home Owners Protection Act 1979 by the Builders’ Registration Board of Queensland, as a result of the negligence or breach of contract on the part of the defendant in carrying out engineering work, namely the assessment of a site and the design of footings and a slab system for the construction of a residence at Aratula. The work was alleged to have been done in 1991 and 1992. Subsequently there was damage to the house as a result of which in 1999 the owners claimed under the statutory insurance policy, responsibility for which had passed to the appellant under the Queensland Building Services Authority Act 1991. During 2000 and 2001 the appellant paid a total of $40,470 under that policy for rectification work on the property. The appellant alleged in the Magistrates Court, that under the applicable statutory provisions it was entitled to recover that amount together with interest from the respondent.
- [3]On 23 May 2003 a deputy registrar signed a judgment in default of filing a notice of intention to defend that the defendant pay the plaintiff the amount of $44,021.47 (including interest and costs). Subsequently by letter to two individuals who were alleged to have been directors of the company at the relevant time, the appellant claimed payment of that amount pursuant to s 111C of the Queensland Building Services Authority Act 1991.
Form of the application
- [4]On 25 July 2003 an application was filed in the Magistrates Court seeking to have the default judgment set aside under r 290 of the UCPR. The application was defective in form, particularly because nowhere does it identify the applicant. The introductory words simply say, “Take notice that the applicant is applying to the court for the following orders.” This is singularly unhelpful. In the case of an interlocutory application, the application is always made by the party making that application, so there is no point in describing that party as an applicant. In truth under the UCPR the term “applicant” and “respondent” should never be used in a proceeding commenced by a claim. They are appropriate only in proceedings commenced by an originating application.[1] It follows that the title in this application is wrong; it should have been the same as the title on the claim.
- [5]Subject to any variation in parties in the course of the proceeding, and subject to r 6(2), the title throughout a proceeding remains as determined by the claim. It is entirely inappropriate for a different title to be used for an application filed in the proceeding. Furthermore, such an application must always identify the applicant by the correct description, never by the title “applicant”. The identification of the form on the bottom left-hand corner, where it says, “filed on behalf of” should always identify the party by the correct description, that is, in the case of a proceeding commenced by a claim, the term plaintiff, defendant, third party, or as the case may be, or, if the applicant is not a party, by the name of the applicant. It should never say, “filed on behalf of the applicant”, which is simply a waste of ink.
- [6]I have gone on about this point at some tiresome length because this is by far the most common procedural mistake which is made under the Uniform Civil Procedure Rules. Those rules have now been in force for almost five years, and I think it is time for everyone to have worked out how they operate and to have learnt how to apply properly such a fundamental provision. It was reasonable, during the earlier period of operation of those rules, for courts to be somewhat lenient about the standard of compliance, but I think those days have now passed. The time is fast approaching where there will be unpleasant consequences for parties that do not use this form correctly in matter which come before me. As it happens, the question of who is the applicant is by no means obvious in this case.
- [7]The only matter relied on in support of the application was that there could not be a judgment signed against the company because the company had been deregistered. If the proposition on which the application was made was correct, for the purposes of this action, the defendant company did not exist. But if the company did not exist it could not apply to have the default judgment against itself set aside. This last point had occurred to counsel for the respondent, who said that he also held instructions to make the application on behalf of the two directors, who claim to have an interest because of the possibility of enforcement of the debt against them. Hence in this case it may have been of some importance to know just who was the applicant in the application before the magistrate.
- [8]The appellant submitted to the magistrate that the effect of the order of the Chief Justice was that the company had been re-registered, and so was available to be sued. The magistrate however was persuaded by the contrary argument, that the effect of the Chief Justice’s order was that the company had been re-registered only for the purpose of a particular action, so that for the purpose of any other action, and in particular for the purpose of the present action, it remained deregistered, and therefore could not be validly sued. Accordingly, on 21 August 2003 the default judgment was set aside ex debito justitiae. The appellant has appealed from that order.
The appellant’s submission
- [9]The appellant has submitted that the only order the Chief Justice could have made was one reinstating the company, and therefore the effect of the Chief Justice’s order was that the company be reinstated for all purposes. The appellant relied in particular on the decision of McLelland CJ in Equity in Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559. In that case his Honour held that under the legislation governing corporations then in existence the power to reinstate was limited to a power to reinstate generally, and there was no power to reinstate a company only for a limited purpose, so that for that purpose the company was treated as being still in existence, but for all other purposes it was treated as not existing. His Honour noted a number of conceptual difficulties with a company being in existence for some purposes but not for others, and said at p. 562: “A company either exists or it does not exist. It cannot exist for some purposes and not exist for others.” Accordingly his Honour concluded at p. 563 that the order that had been made in that case, which purported to reinstate the company only for a specific purpose, “should be construed either as a statement of the reason why the reinstatement was ordered, or as an intended limitation on the objects to be pursued by the reinstated company. Whatever be the correct alternative Future Life was nevertheless reinstated as a company within the meaning of the Corporations Law with the capacity inherent in that status, including the legal capacity to be served with a statutory demand …[and] … to apply to set aside such a demand …”
- [10]The appellant sought also to rely on fresh evidence in the form of a letter from ASIC dated 5 February 2004. I doubt very much if there is anything here which would satisfy the fresh evidence rules, but it is unnecessary to decide that as the appeal can be decided on another basis.
Analysis
- [11]The respondent however submitted that as a result of amendments made after that decision, there was now a wider power available to a court when reinstating a company so that a limited reinstatement was now possible. In particular, the section now provides in subsection (3)(b) that the court may “make any other order it considered appropriate.” This has been said to be a very wide power: Pagnon v WorkCover Queensland [2001] 2 Qd R 492 at 499 per McPherson JA. Nevertheless, it is necessary to look more precisely at the structure of s 601AH in order to understand the significance of this power. Subsection (1) gives ASIC power to reinstate the registration of a company, and subsection (2) provides that “the court may make an order that ASIC reinstate registration of a company if” an application is made by an appropriate person and “the court is satisfied that it is just that the company’s registration be reinstated.” Subsection (3) provides: “If the court makes an order under subsection (2), it may: (a) validate anything done between the deregistration of the company and its reinstatement; and (b) make any other order it considers appropriate.”
- [12]Subsection (4) deals with notice of reinstatement, and subsection (5) is headed “Effect of Reinstatement” and provides: “If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. 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. Any property of the company that is still vested in ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.”
- [13]It seems to me that subsection (3) is distinguishing between the order that the company be reinstated, which is the order made under subsection (2), and any other order, which may only be made if an order under subsection (2) has already been made. That is inconsistent with the notion that the order which can be made under subsection (3)(b) is an order for partial reinstatement. An order under subsection (2) is, it seems to me, plainly an order for complete reinstatement; if there were any doubt about that, I think it is removed by the terms of subsection (5), which contemplate only complete reinstatement. Accordingly it is only if a court makes an order for complete reinstatement that it may then make any other order it considers appropriate. It would I think be inconsistent with the structure of the section, and in particular the terms of subsection (5), for the order made under subsection (3)(b) to extend to an order limiting the scope of the reinstatement. In my opinion, the power, however wide it may be, is essentially one to make consequential orders.
- [14]Furthermore, the effect of the constructions contended for by the respondent would be that the power under subsection (3)(b) would extend to modifying the effect of subsection (5). Counsel for the respondent did not shrink from that submission, but I do not accept it. In my opinion a power to make an order pursuant to a provision of a statute does not extend to a power which would vary what is otherwise a statement of general application in the statute, unless the statute expressly confers on the court a power to modify its operation or effect. There is no express conferring of power on the court to modify the operation of subsection (5), and in my opinion that section applies to any and every order made under subsection (2), and there is no power under subsection (3)(b) to modify its operation.
- [15]The orders which have been made in the more recent cases under subsection (3)(b) have been consequential orders. In Pagnon (supra) his Honour contemplated an order that the time between the dissolution of the company and the expiration of the limitation period under s 11 of the Limitation of Actions Act 1974 should not be counted against the plaintiff.
- [16]Counsel for the respondent also relied on the comments of Barrett J in Shaw v Goodsmith Industries Pty Ltd [2002] NSWSC 406. His Honour there said at [13]: “I am satisfied that it is just that the company concerned be revived for the limited purpose of playing the particular and confined role in the Dust Diseases Tribunal proceedings desired by the plaintiff. A person in the plaintiff’s position should not be deprived of the opportunity to make, indirectly, a claim upon the relevant insurance by the absence from the proceedings of a party whose nominal participation is necessary to enable the plaintiff to pursue that claim. At the same time, however, it would be wrong, in [a] case such as this, to expect directors and officers whose tenure came to an end more than 11 years ago to be expected to go back into any position of stewardship. This is not a case in which the reinstatement should be effected in such a way as to re-launch the company into commercial life. Neither the directors nor the shareholders have made any application to allow that to happen. Particularly in light of the single and limited purpose involved, reinstatement will be appropriate only if the company is immediately placed in the hands of a liquidator.” Accordingly his Honour went on to order that the company be wound up and that a liquidator be appointed, but the order for reinstatement was otherwise made in general terms: “the Australian Securities and Investments Commission reinstate the registration of the company.” Although his Honour did not cite the decision in Re Future Life Enterprises Pty Ltd (supra), the formal orders made appear to me to be consistent with that approach, and consistent with my analysis of s 601AH.
- [17]An order for reinstatement and immediate winding up was also made by his Honour in Partners v Sampson [2002] NSWSC 383. The same sort of order was made in City West Water v Mr D Investments Pty Ltd [2002] VSC 553 where however the court was of the opinion that a company deregistered under the Companies (Victoria) Code had to be re-registered under the appropriate provision in the Code. Neither of these decisions qualify or cast any doubt on the analysis in Re Equitable Life Enterprises Pty Ltd.
The making of the order for reinstatement
- [18]I have looked at the file for the proceeding in which the Chief Justice made his order on 28 March 2001. There is nothing to suggest that his Honour gave any consideration to the question of whether the reinstatement could, or indeed should, be for only a limited purpose, or that his decision amounted to a reasoned conclusion either that he had power to make an order reinstating the company only for a limited purpose, or that he should exercise that power. Accordingly I do not consider that the matter I have to decide is in any way concluded by the terms of the order his Honour made.
- [19]The order was made on the application of the plaintiff in the District Court proceedings which had been commenced in June 1998 against the respondent, which had been frustrated by the dissolution of that company. The application was unopposed; although served on ASIC and the solicitors who had been acting for the respondent in the District Court proceedings, and at the registered office of the former company, there was no other appearance on the hearing of the application. The outline of submissions on behalf of the applicant which is on the file made no reference to any issue about limited re-registration; paragraph 1 said simply that it was an application pursuant to s 601AH(2) that the company be restored to the register. The outline makes no mention of any issue about limited re-registration. There is nothing on the file to indicate that the Chief Justice’s intention was to do anything other than effect the re-registration of the company.
- [20]The associate’s endorsement indicates that the first order the Chief Justice made was, “as per paragraph 1 of the originating application,” which had sought an order in the terms quoted earlier.[2] That explains the terminology used in the order made. It would be natural enough for the application to identify the purpose for which the order was sought, and the fact that the form of words has its origin in the application I think supports a construction that it was intended to be an explanation rather than a limitation of the order.
Conclusion
- [21]In my opinion the reasoning of McLelland CJ in Re Equitable Life Enterprises Pty Ltd (supra) is still applicable to s 601AH in its present form. A company either exists or it does not exist, and the only power to re-register given by the section is a power to re-register generally under subsection (2), which has the effect set out in subsection (5). As a result of the order of 28 March 2001, the respondent company is back in existence for all purposes. Once an order for re-registration has been made, it is open to anybody else to bring a proceeding against the company without seeking any further preliminary order, unless of course the order for re-registration is coupled with an order that the company be wound up.
- [22]Counsel for the respondent submitted that there could well be difficult consequences from such an approach, because an application for registration ordinarily turns on whether it is appropriate from the point of view of the applicant or the parties immediately before the court for the company to be re-registered. That may well be the case, but there are competing considerations, as McLelland CJ pointed out at p. 562, and in any case what I have to decide is not whether it would be desirable for there to be a power to reinstate the company for a limited purpose only, but whether the legislature has conferred such a power on the court. In my opinion on the true construction of the section it has not, and that is the end of the matter. The only order the Chief Justice could have made was that the company be reinstated, that is, generally, so that must be the effect of his Honour’s order.
- [23]It follows that the conclusion of the magistrate was wrong. At the time when this action was commenced, the company had been reinstated and was therefore able to be sued in the same way as any other company can be sued. The only ground relied on in the application was without substance, and the application ought to have been dismissed.
- [24]It does not follow of course that no application to set aside the default judgment could be successfully made. Given the terms of the order made by the Chief Justice, it was certainly reasonable for those in control of the company, and indeed those advising them, to assume that the company was not in existence for any other purpose, so that it could not be sued by anyone else, and the claim from the Magistrates Court in the present case could be disregarded with impunity. Indeed, if the respondent’s arguments were correct, the proceeding commenced in the Magistrates Court was of doubtful validity, and the judgment against the (relevantly non existent) defendant was a nullity.[3] In these circumstances, it could not have been the basis for any statutory entitlement to recover payment from persons who at some earlier time were directors of the company. On the view that I take of course the company was in existence, it could be sued, default judgment could be signed against it, and it could apply to have the default judgment set aside.
- [25]It remains open to the company, if it can show some arguable defence on the merits, to apply to have the judgment set aside. Provided that an arguable defence on the merits can be shown, the application would be bound to succeed, since the company obviously had a good excuse for failing to take steps to defend the action; it (or rather those who are in control of it) could have reasonably believed, as a result of the terms of the order made by the Chief Justice, that the company only existed for some other purpose, and therefore could not be validly sued, and indeed could not file a notice of intention to defend in response to the appellant’s claim.
- [26]In the circumstances therefore the appeal should be allowed, the order of the magistrate set aside, and in lieu thereof the respondent’s application be dismissed with costs. The appellant is entitled to its costs of the appeal from the respondent, but in all the circumstances of this case, and particularly bearing in mind the nature of the legal issue involved, and the terms of the order by which the company was reinstated, in my opinion it is appropriate that the respondent have an indemnity certificate under the Appeal Costs Fund Act.
Footnotes
[1] See notes 2 and 3 to Form 1.
[2] There is no draft order on the file, so this was a convenient short form of order.
[3] Simmons v Liberal Opinion Ltd [1911] 1 KB 966; United Service Insurance Co Ltd v Lang (1935) 35 SR(NSW) 487 at 497; Re Kilkenny Engineering Pty Ltd (1976) 13 SASR 258 at 267; Ex parte Mitchell Products Pty Ltd (1996) 21 ACSR 497 at 514; Bianchi v Crewe & Sons Pty Ltd (1996) 135 FLR 15.