Federal Court of Australia

Endless Solar Corporation Limited v Australian Securities and Investments Commission, in the matter of Speedpanel Australia Ltd [2023] FCA 720

ORDERS

THE COURT ORDERS THAT:

1.    Nathan Joseph (Nick) Scheuer, in his personal capacity and in his capacity as trustee of the Asher & Wald Trust), be joined as the second defendant to the proceeding.

2.    By 4 pm on 7 July 2023, the plaintiff serve sealed copies of these orders and the accompanying reasons for decision on:

(a)    all persons named as defendant in the writ dated 6 March 2023 and filed in the Supreme Court of Victoria proceeding ECI 2023 00852 (except Mr Nathan Joseph (Nick) Scheuer); and

(b)    all persons named as defendant in the writ dated 17 March 2023 and filed in the Supreme Court of Victoria proceeding S ECI 2023 01060 (except Mr Nathan Joseph (Nick) Scheuer).

3.    By 4 pm on 21 July 2023, any person on whom a copy of these reasons has been served in accordance with paragraph 2 of these orders and who opposes the reinstatement of the registration of Speedpanel Australia Ltd ACN 107 723 240 may indicate their opposition by filing and serving on the parties a notice of objection and sending a copy by email to the chambers of O’Bryan J.

4.    The proceeding be listed for case management at 9.30 am on 28 July 2023.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’BRYAN J

Introduction

1    On 19 June 2022, Speedpanel Australia Ltd ACN 107 723 240 (SPA) was deregistered by the Australian Securities and Investments Commission (ASIC) pursuant to s 601AB of the Corporations Act 2011 (Cth) (Act), which empowers ASIC to deregister a company in certain circumstances including, relevantly, where a company fails to lodge documents required to be lodged under the Act or to pay certain fees. At the time of deregistration, SPA had no directors.

2    On 28 February 2023, the plaintiff (Endless Solar) filed an originating process in this proceeding seeking an order under s 601AH(2)(a)(i) of the Act that ASIC reinstate the registration of SPA. It is not in dispute that Endless Solar was a shareholder of SPA at the date of its deregistration. Other than joining ASIC to the proceeding, Endless Solar did not notify any other person of its application. ASIC indicated that it did not oppose the application and did not appear at the hearing of the application.

3    Mr David Craig is a director of Endless Solar. Mr Craig appears to be the person responsible for causing Endless Solar to bring the application for reinstatement. No other evidence has been adduced concerning Endless Solar.

4    The application for reinstatement was heard by Judicial Registrar Luxton on 2 March 2023. Judicial Registrar Luxton granted the application and made the following orders on that day:

1.    The defendant (ASIC) reinstate the registration of Speedpanel Australia Ltd (ACN 107 723 240) (Company) pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) (Act) by 5:00 pm on 3 March 2023.

2.     The plaintiff lodge with ASIC forthwith a sealed copy of this order, together with a completed ASIC form 105.

3.     If, by 31 March 2023, no directors are appointed to the Company, the plaintiff file and serve by 14 April 2023 an interlocutory process seeking orders that:

(a)    a meeting of the Company’s members be called pursuant to s 249G of the Act, or on some other basis, for the purpose of considering any proposed resolution concerning the appointment of directors; or

(b) the Company be wound up.

4.     There is no order as to costs.

5    As discussed in more detail below, a number of actions were taken by Endless Solar following the reinstatement:

(a)    First, Endless Solar filed two writs in the Supreme Court of Victoria on 6 March 2023 and 17 March 2023 respectively. The writs name numerous defendants including SPA, its related entities Speedpanel (Vic.) Pty Ltd (In Liquidation) and Speedpanel Corporate Services Pty Ltd (In Liquidation), the former directors of SPA (Mr Nathan Joseph (Nick) Scheuer, Mr Jerzy Muchnicki and Mr Peter Bernhardt), and legal and accounting advisers formerly engaged by SPA, amongst others.

(b)    Second, Endless Solar purported to convene a general meeting of shareholders of SPA to be held on 30 March 2023 for the purpose of considering proposed resolutions to appoint directors.

6    The writs filed in the Supreme Court of Victoria are yet to be served.

7    In relation to the attempt to convene a general meeting of SPA, on 28 March 2023 Mr Scheuer commenced proceeding VID 187/2023 in this Court seeking relief against Endless Solar and a second company, Harvard Nominees Pty Ltd (Harvard). In broad terms, Mr Scheuer sought final and interlocutory injunctions restraining Endless Solar and Harvard from arranging to hold, holding or purporting to hold the proposed general meeting of SPA that was scheduled for 30 March 2023. An important issue raised in that proceeding concerned the existence of a register of members of SPA and the ability to reconstruct such a register. The interlocutory application was heard by me on 29 March 2023 in the Commercial and Corporations duty list. I granted the interlocutory relief sought by Mr Scheuer and also made orders for that proceeding to be case managed together with the present proceeding, having regard to the close connection between the issues raised in both proceedings: Scheuer (Trustee) v Endless Solar Corporation Limited [2023] FCA 299.

8    I conducted a case management hearing in both proceedings on 11 April 2023. Relevantly, in this proceeding, I made orders giving Mr Scheuer leave to file and serve any application for review of the reinstatement orders made by Judicial Registrar Luxton by 14 April 2023, and timetabling the hearing of any such application.

9    On 14 April 2023, Mr Scheuer filed an application seeking the review of the reinstatement orders pursuant to ss 35A(5) and (6) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The review is in the nature of a rehearing de novo: Harris v Caladine (1991) 172 CLR 84; Bechara v Bates (2021) 286 FCR 166 at [17]. These reasons concern that application.

10    In the present application, Mr Scheuer seeks the following orders:

(a)    that Mr Scheuer (both in his personal capacity and in his capacity as trustee of the Asher & Wald Trust) be joined as a defendant to this proceeding pursuant to r 9.05 of the Federal Court Rules 2011 (Cth) (FC Rules) and/or r 2.13(4) of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules);

(b)    that, to the extent necessary, the time for making this application be extended to 14 April 2023, pursuant to r 16.1(3)(b) of the Corporations Rules and/or r 1.39 of the FC Rules;

(c)    that the order made by Judicial Registrar Luxton on 2 March 2023 requiring ASIC to reinstate the registration of SPA be set aside;

(d)    that the proceeding be dismissed; and

(e)    that Endless Solar pay Mr Scheuer’s costs of and incidental to the application, to be assessed if not agreed.

11    In support of the application, Mr Scheuer relies on:

(a)    an affidavit of Mr Scheuer sworn on 14 April 2023; and

(b)    an outline of submissions dated 15 May 2023.

12    Endless Solar does not oppose the extension of time and the joinder of Mr Scheuer as a defendant to this proceeding. In my view, an order for an extension of time is unnecessary because that was the effect of the order I made on 11 April 2023. It is appropriate for Mr Scheuer to be joined as the second defendant to this proceeding and I will make that order.

13    Endless Solar otherwise opposes the relief sought by Mr Scheuer. In doing so, it relies on:

(a)    the affidavits previously filed in this proceeding for the purpose of the hearing before Judicial Registrar Luxton, which comprise:

(i)    the affidavit of Mr Robert True of Quinn Emanuel Urquhart & Sullivan, solicitors for Endless Solar, affirmed on 27 February 2023 (First True Affidavit);

(ii)    the affidavit of Mr Robert True affirmed on 1 March 2023 (Second True Affidavit);

(iii)    the further affidavit of Mr Robert True affirmed on 1 March 2023 (Third True Affidavit);

(iv)    the affidavit of Mr David Craig, director of Endless Solar, sworn 2 March 2023 (Craig Affidavit);

(b)    an affidavit of Mr Robert True affirmed on 5 May 2023 (Fourth True Affidavit); and

(c)    an outline of written submissions dated 22 May 2023.

14    For the reasons that follow, Endless Solar has failed to afford procedural fairness to all persons who may be affected by its application for reinstatement of SPA, by failing to give all such persons due notice of the application. In the circumstances, the appropriate course is to require Endless Solar to give such notice of its application to all persons named as defendants to the Supreme Court writs that have been filed and afford those persons an opportunity to be heard on this application. The further hearing and determination of this application will be adjourned until after those steps have been taken.

Relevant facts established by the evidence

SPA

15    SPA is a public company. It was incorporated in 2004. Its business comprised products for the construction of walls, using lightweight panels which could be filled with a concrete inner core. It is not in dispute that, at all relevant times, Mr Scheuer has been a shareholder of SPA, both in his personal capacity and as trustee for the Asher & Wald Trust.

16    Mr Scheuer deposed that, when SPA was incorporated in 2004, it was wholly-owned by a company called Speedwall Holdings Pty Ltd. The initial directors were Mr Craig, Mr David Dirk Visser and Mr Scheuer. An ASIC search shows that Mr Craig ceased to be a director in July 2010.

17    Mr Scheuer further deposed that, in 2016, SPA and its related companies were facing severe financial difficulties. Mr Scheuer had supplied personal guarantees to National Australia Bank Limited (NAB), which exposure was at times up to $20 million. In order to prevent the business from collapsing, and the guarantees to be called on, Mr Scheuer lent the business money. In 2016, he lent approximately $1 million. Mr Scheuer also deposed that he invested another $1 million to take up a share rights issue in 2016, but that he does not recall the full details of this. SPA also obtained a short-term loan from the NAB in the amount of about $1 million in 2016 which had to be repaid by the end of January 2017. Mr Scheuer deposed that, by early 2017, things had become unsustainable. The relationship between SPA’s shareholders had deteriorated and was dysfunctional. Mr Scheuer proposed to shareholders that he invest more funds in return for the issue of shares, but the other shareholders resisted this. Mr Scheuer deposed that the impasse was broken on 21 March 2017, when the directors of SPA resolved to appoint administrators to SPA and two related companies, Speedpanel (Vic.) Pty Ltd and Speedpanel Corporate Services Pty Ltd.

Administration and proposal for deed of company arrangement

18    On 21 March 2017, SPA, Speedpanel (Vic.) Pty Ltd and Speedpanel Corporate Services Pty Ltd were placed into voluntary administration pursuant to s 436A of the Act.

19    The administrators’ report to creditors pursuant to s 439A of the Act and dated 29 August 2017 states as follows:

Due to some doubt surrounding the validity of the Administrators’ appointment to the Companies, the Administrators made an application to the Court seeking orders that the appointment of the Administrators to the Companies was valid. On 29 March 2017, the Supreme Court of Victoria made orders validating the appointment of the Administrators.

20    Endless Solar does not concede that such orders were made by the Supreme Court of Victoria.

21    The administrator’s report dated 29 August 2017 set out the shareholdings of SPA based on “unverified records of the Company”. The report indicated that the shareholdings of the two largest shareholders, the Asher & Wald Trust and Aussie Distributors Pty Ltd, were unclear. Specifically, it was unclear whether the Asher & Wald Trust held 39,233,991 or 11,154,440 shares, and it was unclear whether Aussie Distributors Pty Ltd held 12,601,490 or 4,714,285 shares. Adopting the lower number in each case for the sake of comparison, the report suggests that: the total issued share capital of SPA comprised 49,830,759 shares; the shares held by Mr Scheuer in his personal capacity and as trustee of the Asher & Wald Trust comprised 11,654,707 shares (being approximately 23% of the issued capital) and the total issued share capital held by Endless Solar comprised 636,338 shares (being approximately 1.3% of the issued capital).

22    The administrators’ report dated 29 August 2017 recorded that, as at the date of the report, NAB was owed $16,506,488 by the group of companies. On 16 June 2017, an indicative proposal for a deed of company arrangement (DOCA) was submitted by Mr Scheuer, which was subject to obtaining the ongoing support of NAB. Following negotiations with the bank, on 25 August 2017 Mr Scheuer put forward a finalised proposal for a DOCA.

23    On the application of the administrators, the date for the second meeting of creditors of SPA was extended twice by this Court:

(a)    on 26 April 2017, O’Callaghan J made orders extending the convening period to 29 July 2017; and

(b)    on 28 July 2017, Moshinsky J made orders extending the convening period to 29 August 2017.

24    On 5 September 2017, the second meeting of the creditors of SPA was convened pursuant to s 439A of the Act. The administrators of SPA and its related entities recommended that creditors enter into the proposed DOCA. At that meeting, each of SPA’s creditors resolved that SPA enter into the proposed DOCA.

25    On 26 September 2017, the Court made orders extending the time by which SPA was required to execute the DOCA.

26    On 9 October 2017, the administrators of SPA exercised their powers pursuant to s 442A of the Act to remove two directors of the company, Mr Steve Happell and Mr Visser.

27    On 10 October 2017, a DOCA for SPA and its related companies was executed, after receiving approval from creditors. Under the terms of the DOCA, amongst other things:

(a)    all assets and employees of SPA and two related companies were, in effect, transferred to two new companies controlled by Mr Scheuer and owned by parties associated with him, Speedpanel Systems Pty Ltd and Speedpanel Holdings Pty Ltd (cl 7);

(b)    Mr Scheuer paid to the DOCA administrators:

(i)    a “Contribution Sum” of $3,000,000 (cl 1, 5.1); and

(ii)    a “Proponent Adjustment Amount” (comprising payments in respect of wages, employee entitlements, rent and outgoings) (cl 1, 6.1(a));

(c)    Mr Scheuer paid to NAB a “NAB Debt Reduction Payment” of $500,000 (cl 1, 6.1(b)); and

(d)    a “Deed Fund”, including the “Contribution Sum”, “Proponent Adjustment Amount” and other amounts, was established to meet the claims of other creditors (cl 9).

28    On 29 March 2019, the DOCA was wholly effectuated. The Deed Administration ended and SPA returned to the control of its directors.

SPA’s business following completion of the DOCA

29    At the time that the DOCA ended, the directors of SPA were Mr Scheuer, Mr Bernhardt and Mr Muchnicki. Mr Scheuer deposed that there were ongoing disputes between the shareholders of SPA at this time.

30    On 3 June 2020, Mr Scheuer and Mr Muchnicki resigned as directors of SPA. Mr Bernhardt resigned on 2 July 2020. The directors were not replaced. From 3 July 2020, there were no directors of SPA. Mr Scheuer deposed that, around this time, SPA no longer had any business or assets.

31    On 19 June 2022, SPA was deregistered by ASIC pursuant to s 601AB of the Act.

Reinstatement proceeding

32    As described above, in February 2023 Endless Solar applied to this Court for reinstatement of the registration of SPA pursuant to s 601AH(2) of the Act, having earlier applied to ASIC for administrative reinstatement pursuant to s 601AH(1) without success.

33    In a brief affidavit, Mr Craig deposed that Endless Solar sought reinstatement of SPA in its capacity as a shareholder of SPA at the time of deregistration because it wished to bring a claim for oppression against SPA. Mr Craig deposed that: he believed that SPA had valuable property in the form of claims for breach of duty against certain of its former directors and service providers, including Mr Scheuer, and that Endless Solar wished to bring a derivative proceeding on behalf of SPA against those persons. Mr Craig also deposed that Endless Solar’s claim against SPA and SPA’s claims against certain former directors and service providers was supported by documentary evidence (including, but not limited to, a bundle of documents annexed to the First True Affidavit) and testimony which Mr Craig proposed to give. The bundle of documents annexed to the First True Affidavit included, amongst other things: company searches for various companies, documents relating to the administration of SPA (including the administrators’ report to creditors), correspondence between former directors of SPA and PricewaterhouseCoopers, documents relating to the resignation of the directors of SPA and a copy of the constitution of SPA.

34    Having reviewed Mr Craig’s affidavit and the documents to which he referred, I consider that the evidence adduced by Endless Solar on the application is wholly insufficient to establish that Endless Solar has any viable claim against SPA. Mr Craig’s belief is unsupported by any relevant evidence.

35    The material filed by Endless Solar in support of its reinstatement application did not include any draft writ or statement of claim which it proposed to file if the application were granted.

36    On 2 March 2023, Judicial Registrar Luxton made an order reinstating the registration of SPA.

37    It is not in dispute that Mr Scheuer was not notified of the application for reinstatement. Mr Scheuer deposed that he only became aware of the reinstatement when he was sent two emails on 8 and 9 March 2023 by Mr Happell, a former director and company secretary of SPA, relating to a proposed meeting of the members of SPA to be held on 30 March 2023.

38    There is no evidence before the Court indicating that any other potential defendant to the claims that Endless Solar seeks to bring, including either of Mr Bernhardt or Mr Muchnicki (who were, together with Mr Scheuer, the last directors of SPA prior to their resignation and the company’s subsequent deregistration), was notified of the application for reinstatement. Nor is there evidence to the effect that those persons have been notified of Mr Scheuer’s present application to review the order for reinstatement.

Proceedings in the Supreme Court of Victoria

39    On 6 March 2023, Endless Solar filed a writ in the Supreme Court of Victoria (proceeding S ECI 2023 00852). The writ names SPA, its related entities Speedpanel (Vic.) Pty Ltd (In Liquidation) and Speedpanel Corporate Services Pty Ltd (In Liquidation), as defendants, together with Mr Scheuer (both in his personal capacity and in his capacity as trustee of the Asher & Wald Trust), Mr Muchnicki and Mr Bernhardt (in their capacities as former directors of SPA), Speedpanel Holdings Pty Ltd (one of the two companies that received assets and employees under the DOCA), and legal and accounting advisers formerly engaged by SPA to provide legal and auditing services respectively.

40    The claims advanced by Endless Solar in the writ are wide-ranging, complex and confusing. In broad terms, it appears that Endless Solar advances claims to the following effect:

(a)    Mr Scheuer, Mr Bernhardt and Mr Muchnicki, in their capacities as former directors of SPA, breached their statutory, fiduciary and contractual duties, caused SPA’s affairs to be conducted in an oppressive manner contrary to s 232 of the Act and engaged in misleading and deceptive conduct contrary to s 18 of the Australian Consumer Law by:

(i)    their conduct prior to 21 March 2017 (when SPA and its related entities entered into voluntary administration) in seeking to, among other things, engineer a situation whereby SPA and its related entities were placed in a position of significant financial distress and then placed into voluntary administration; and

(ii)    their conduct between August and October 2017 in (via the DOCA) effecting the transfer and realising the full value of assets and business opportunities from SPA and its related entities into a new entity in which Endless Solar had no economic interest;

(b)    the former legal advisers of SPA breached their statutory, fiduciary and contractual duties owed to SPA, its related entities and/or Endless Solar, by, among other things, failing to take steps to prevent and/or assisting the former directors to engage in the alleged contraventions and assisting in the appointment of voluntary administrators, and further, by reason of the same conduct, that they knowingly assisted or were involved in the named former directors’ breaches of duty and/or contraventions;

(c)    the former accountants of SPA breached their statutory, equitable and contractual duties owed to SPA, its related entities and/or Endless Solar and engaged in misleading and deceptive conduct contrary to the Australian Consumer Law, its related entities and/or the plaintiff by, among other things, causing the audited annual accounts for SPA and its related entities for the 2015 financial year to be restated in the knowledge that the restatement was inaccurate, failing to complete the audited annual accounts for the 2016 financial year, and failing to bring to the attention of the SPA’s board the conduct of the former directors.

41    Endless Solar seeks on its own behalf various relief, including damages and/or equitable remedies, and orders pursuant to s 233 of the Act. Endless Solar also seeks relief on behalf of SPA pursuant to s 233 of the Act, including damages and equitable remedies.

42    On 17 March 2023, Endless Solar and NDD International Pty Ltd (In Liquidation) (NDD) filed a second writ in the Supreme Court of Victoria (proceeding S ECI 2023 01060). The writ states that NDD is a shareholder of Speedpanel International Limited (In Liquidation) (SPI), which was one of the entities within the group of companies that operated the Speedpanel business and which held certain licensing rights in respect of materials sold by that business. The writ names SPA, its related entities Speedpanel (Vic.) Pty Ltd (In Liquidation), Speedpanel Corporate Services Pty Ltd (In Liquidation) and SPI, as defendants, together with Mr Scheuer (both in his personal capacity and in his capacity as trustee of the Asher & Wald Trust), Mr Muchnicki and Mr Bernhardt (in various capacities, including as former directors and shareholders of SPA and SPI), Speedpanel Holdings Pty Ltd (one of the two companies that received assets and employees under the DOCA), and legal advisers formerly engaged by SPI and the former administrators and deed administrators appointed to SPA and its related entities in March 2017.

43    Once again, the claims advanced by Endless Solar and NDD in the second writ are extensive, complex and confusing. Broadly, it appears that Endless Solar and NDD advance claims to the following effect:

(a)    the former administrators breached their statutory, equitable and contractual duties owed to SPA, its related entities, and Endless Solar, and engaged in misleading and deceptive conduct pursuant to s 18 of the Australian Consumer Law, by their conduct of the administration process (including their recommendation to the creditors of SPA and its related entities that they accept the DOCA propounded by Mr Scheuer);

(b)    Mr Scheuer, Mr Bernhardt and Mr Muchnicki breached their statutory, fiduciary and contractual duties owed to SPI, caused SPI’s affairs to be conducted in an oppressive manner contrary to s 232 of the Act, and engaged in misleading and deceptive conduct contrary to s 18 of the Australian Consumer Law, by:

(i)    their conduct prior to 21 March 2017 in seeking to, among other things, terminate or delay SPI’s existing licensing and other contractual arrangements, cause SPI not to take up further investment opportunities, and place both SPI and the wider group, including SPA, into a position of financial distress;

(ii)    their conduct between August and October 2017 in effecting the transfer and realising the full value of assets and business opportunities from SPA and its related entities into a new entity by means of the DOCA;

(c)    the former legal advisers of SPI breached their statutory, fiduciary and contractual duties owed to SPI, and/or NDD, by, among other things, failing to take steps to prevent and/or assisting the named former directors of SPI to engage in the alleged contraventions and assisting in the appointment of voluntary administrators, and further, by reason of the same conduct, that they knowingly assisted or were involved in the named former directors’ breaches of duty and/or contraventions.

44    Endless Solar seeks relief on behalf of SPA pursuant to s 233 of the Act, including damages and equitable remedies. NDD seeks relief on its own behalf, as well as on behalf of SPI under s 233 of the Act, including damages, equitable remedies and other orders pursuant to s 233.

45    In his affidavit, Mr Scheuer states that neither writ has been served on him. It is not disputed that Endless Solar has not sought leave to commence proceedings on behalf of SPA pursuant to s 237 of the Act.

Statutory provisions

46    The reinstatement of a deregistered corporation is addressed in s 601AH of the Act. Section 601AH of the Act relevantly provides:

Reinstatement by ASIC

(1)     ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered.

…

Reinstatement by Court

(2)      The Court may make an order that ASIC reinstate the registration of a company if:

(a)      an application for reinstatement is made to the Court by:

(i)      a person aggrieved by the deregistration; or

(ii)      a former liquidator of the company; and

(b)      the Court is satisfied that it is just that the company’s registration be reinstated.

(3)      If:

(a)      ASIC reinstates the registration of a company under subsection (1) or (1A); or

(b)      the Court makes an order under subsection (2);

the Court may:

(c)      validate anything done during the period:

(i)      beginning when the company was deregistered; and

(ii)      ending when the company’s registration was reinstated; and

 (d)      make any other order it considers appropriate.

Note:           For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).

ASIC to give notice of reinstatement

(4)      ASIC must give notice of a reinstatement in the Gazette.

…

    Effect of reinstatement

(5)      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 the Commonwealth or 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.

…

47    It can be seen that the Court is empowered by s 601AH(2) of the Act to require ASIC to reinstate the registration of a company if two conditions are satisfied: first, an application is made by a person aggrieved by the deregistration; and second, that the Court is satisfied that it is just that the company’s registration be reinstated.

48    The expression “person aggrieved” is not defined in the Act. However, it is an expression of wide import and should be construed liberally. It includes a person who has been deprived of something, or injured or damaged in the legal sense, such as a person who has some right of potential value that has been extinguished (including a right to bring a claim against the company, and potentially a claim by the company against a third party): Hinz, in the matter of KEAD Pty Ltd (Deregistered) v KEAD Pty Ltd (Deregistered) [2022] FCA 270; 158 ACSR 444 (Hinz) at [19] (Halley J) (and the cases cited therein). The threshold for a plaintiff to establish that they are an aggrieved person is low and can be dealt with in a summary way. Provided that the claims advanced by the person alleging a grievance are not hopeless or bound to fail, that person will be an aggrieved person for the purpose of s 601AH(2)(a). Any further analysis is unnecessary: Boys, in the matter of 38 Akuna Pty Ltd (Deregistered) v Australian Securities and Investments Commission [2019] FCA 320 at [24] (Lee J); Re Brockweir Pty Ltd [2012] VSC 225 (Re Brockweir) at [22] (Sifris J).

49    The requirement that the Court be satisfied that the reinstatement is “just” confers a broad discretion on the Court. Factors relevant to the exercise of that discretion include the circumstances in which the company was deregistered, the purpose in seeking its reinstatement, whether any person is likely to be prejudiced by reinstatement, and the public interest generally: see Re ERB International Pty Ltd (deregistered) [2014] NSWSC 200; 98 ACSR 124 (Re ERB) at [5] (Brereton J) and the authorities there cited. The applicant for reinstatement bears the onus of establishing that the reinstatement is just: Re ERB at [10].

Submissions of the parties

Submissions of Mr Scheuer

50    Mr Scheuer contends that he has an interest in the outcome of the reinstatement application on two bases. First, he would become a shareholder of SPA upon reinstatement. Second, Endless Solar’s purpose in seeking the reinstatement of SPA is so that it may prosecute claims against Mr Scheuer in his capacity as a former director of SPA (and Mr Scheuer is a named defendant in that capacity in proceedings filed in the Supreme Court of Victoria by Endless Solar).

51    As noted earlier, Endless Solar does not oppose the joinder of Mr Scheuer as a defendant to this proceeding for the purpose of the review application.

52    Mr Scheuer contends that the order for reinstatement made by Judicial Registrar Luxton should be set aside on four substantive bases.

53    First, the order for reinstatement was made in circumstances in which there has been a denial of procedural fairness. Mr Scheuer, as a person affected by the order for reinstatement, was denied procedural fairness in the hearing of the application before Judicial Registrar Luxton in circumstances where: he was not notified of the application (and did not become aware of it until after the application was heard and determined); Endless Solar had the contact details of at least Mr Scheuer, and so could have notified him (and did in fact contact him a few days after the application was determined); he did not have an opportunity to raise relevant matters before the Judicial Registrar at the hearing on 2 March 2023; and he is a person affected by the order for reinstatement as its stated purpose was to pursue claims against him. Further, Endless has not taken steps to notify any other potential defendants to its proceedings of its application for reinstatement. As those persons may also be affected by the reinstatement, it would be procedurally unfair to order the reinstatement of SPA without also providing them with the same opportunity to be heard. Relying on the principles stated in Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd (2008) 71 NSWLR 262 at [85] (Spigelman CJ, with Tobias and Campbell JJA agreeing at [102]-[103]) (Miltonbrook) and Dahozo Pty Ltd v Oz-Us Film Productions Pty Ltd (1997) 24 ACSR 739 at 742 (Bryson J) (Dahozo), Mr Scheuer submits that the order for reinstatement made on 2 March 2023 is therefore invalid and liable to be set aside as a matter of “unconditional right”.

54    Second, Mr Scheuer contends that Endless Solar failed to disclose all relevant matters in the hearing of its reinstatement application before Judicial Registrar Luxton, which was conducted on an ex parte basis. The non-disclosure enables Mr Scheuer, as a person adversely affected, to set aside the reinstatement order. Mr Scheuer identifies a number of matters which, he submits, ought to have been disclosed to the Judicial Registrar. Those matters include, for example: Endless Solar’s intention to appoint directors to SPA for the purpose of investigating Endless Solar’s potential claims against SPA; that the register of members annexed to the First True Affidavit and relied upon by Endless Solar was not accurate and current at the time of deregistration (which Endless Solar has subsequently confirmed to be the case); and that Endless Solar did not intend to bring proceedings on behalf of SPA by means of a “derivative suit”.

55    Third, the Court cannot be satisfied that the reinstatement of SPA is “just”, as required by s 601AH(2)(b) of the Act, and therefore ought not to exercise its discretion to reinstate. Factors relevant to the exercise of that discretion include: the circumstances in which the company was deregistered; the purpose of seeking reinstatement; whether any person is likely to be prejudiced by reinstatement; and the public interest generally: Re ERB at [5] (Brereton J). Mr Scheuer contends that reinstatement would not be just for the following reasons.

(a)    Endless Solar’s claims against Mr Scheuer and others, as set out in the Supreme Court writs, are without merit and/or time barred such that it would be futile to reinstate SPA to enable pursuit of those claims, and therefore unjust to do so. In this regard, Mr Scheuer identifies a number of procedural and substantive defects in Endless Solar’s claims.

(i)    Endless Solar has not sought derivative leave to pursue claims on behalf of SPA in either proceeding. In the first writ, Endless Solar purports to bring claims on its own behalf. However, as a shareholder, it has no standing to do so. In both writs, Endless Solar purports to make claims for SPA pursuant to s 233 of the Act (although Endless Solar does not allege oppression in respect of SPA in the second writ). While s 233(1)(g) of the Act enables the Court, if it finds oppression, to make an order authorising a member to institute specified proceedings in the name and on behalf of the company, that power is enlivened only after a finding of oppression has been made. Mr Scheuer contends that by the time that an order is made, Endless Solar will be out of time to commence any proceeding on behalf of SPA – and, as at the date of the hearing, Endless Solar’s claims relating to conduct that occurred before March 2017 are already out of time.

(ii)    In “rare and exceptional” circumstances, a director may be ordered to pay money directly to a company in a proceeding for oppression pursuant to s 233 of the Act: see eg, Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; 37 ACSR 672; CIP Group Pty Ltd v So [2022] FCA 1490 (CIP Group) at [69]-[91] (Derrington J). However, the Court may refuse to exercise its discretion to make such an order where the more appropriate course is for an action on behalf of the company to be pursued in reliance on s 237: CIP Group at [80]. Moreover, there is no authority which suggests that such an order may be made in circumvention of a limitation period.

(iii)    There is a fundamental conceptual difficulty in seeking relief under s 233 of the Act where the company in question has been deregistered. The purpose of such relief is to bring an end to oppression, and yet the end of the company must necessarily have brought an end to oppression, rendering any relief futile. Further, Endless Solar does not make any claim of oppression with respect to SPA in the second Supreme Court writ; its claim of oppression is directed only to SPI.

(iv)    The claims made by Endless Solar against Mr Scheuer and other directors of SPA in respect of their conduct after SPA entered into voluntary administration are confined to the acquisition of the Speedpanel business. The claims are defective insofar as the administrators’ appointment displaced the directors’ power to deal with the property of SPA pursuant to s 437D of the Act (and, even if it was not, SPA’s constitution expressly authorised the directors to transact with the company), and the sale of the business was pursuant to a DOCA approved by creditors. Further, the claims against PricewaterhouseCoopers in the first writ must fail as they were not SPA’s auditors as alleged.

(v)    Any claim made by Endless Solar in respect of the appointment of the administrators of SPA and its related entities in March 2017 is estopped in circumstances where the appointment was validated by the Supreme Court of Victoria pursuant to s 447C of the Act.

(vi)    The deficiencies in Endless Solar’s claims identified above are legal, rather than factual in character, and are self-evident such that the Court is not required in the present application to resolve contested questions of fact in order to find that claims are so unlikely to succeed as to render reinstatement futile (see, eg, Grogan Pty Ltd v Australian Securities and Investments Commission, SIRA Pty Ltd (Deregistered) [2020] FCA 1832 at [14] per O’Callaghan J (Grogan)).

(vii)    Endless Solar has failed to file any material supporting a conclusion that its claims have a reasonable prospect of success, which it must demonstrate where reinstatement is sought for the purpose of pursuing claims against and on behalf of SPA.

(viii)    Endless Solar has failed to provide any evidence in this application that the liquidator of the second plaintiff in the second writ filed in the Supreme Court of Victoria, being a company in liquidation, has given consent for the proceeding to be issued.

(b)    Public interest considerations weigh against reinstatement. First, SPA has no business or assets, other than the purported claims made by Endless Solar ostensibly on SPA’s behalf. The value of those claims is open to question: Endless Solar itself seeks time to consider the value of those claims before serving the Supreme Court writs. Mr Scheuer submits that it is contrary to the public interest to reinstate a hopelessly insolvent company, where that reinstatement is likely to involve breaches by directors of their obligations in respect of insolvent trading. Nor is there evidence supporting Endless Solar’s ability to fund the proceedings on an ongoing basis. Second, Mr Scheuer submits that SPA will be devoid of proper governance. It presently has no directors. In these circumstances alone, it would not be just to resurrect the company: Gardiner v National Australia Bank Ltd; National Australia Bank v Gardiner [2023] NSWSC 45 at [371] (Rees J). There is added difficulty here, however, insofar as Endless Solar proposes to appoint directors for the express purpose of carrying out investigations into Endless Solar’s claims. The directors will therefore be in a position of conflict in circumstances where they will have a duty to act in good faith and in the best interests of SPA, and for a proper purpose, yet will use their positions to promote Endless Solar’s claims against SPA.

(c)    There has been extensive delay by Endless Solar in seeking the reinstatement of SPA, and in pursuing its claims against and on behalf of SPA. In particular, Endless Solar took no steps to commence proceedings at the time of the alleged conduct the subject of both writs (which occurred some six years ago), the resignation of Mr Scheuer and the remaining directors of SPA in June and July 2020, or the deregistration of SPA in June 2022.

(d)    The reinstatement of SPA and the pursuit by Endless Solar of its claims will cause prejudice to Mr Scheuer and other defendants named in the writs. The investigations to be conducted by the board of SPA following reinstatement, and the determination of SPA’s shareholdings, which will be necessary if Endless Solar’s claims are pursued (if for no other reason than to determine the distribution of any proceeds of the litigation), will cause significant time, stress and expense. Although it will rarely be the case the mere reinstatement will be prejudicial to a potential defendant, and the Court should not conclude that the reinstatement would be unjust on considerations analogous to abuse of process or want of prosecution unless “affirmatively satisfied that a fair trial could not be had, or that the proposed proceedings were doomed to fail” (Re ERB at [13]), the Court should reach that conclusion in the present case having regard to the deficiencies of Endless Solar’s claims.

(e)    ASIC’s non-opposition to the reinstatement of SPA is a factor of little, if any weight, in circumstances where ASIC’s position was premised on incorrect information supplied to it by Endless Solar. Endless Solar informed ASIC that it had not notified the former directors of SPA of the reinstatement application because Endless Solar did not have the contact details for the former directors, when in fact it did have, at a minimum, the contact details for Mr Scheuer.

Submissions of Endless Solar

56    Endless Solar submits that, in an application for review pursuant to s 35A(5)-(6) of the Act, the Court must exercise the power of reinstatement afresh. On that basis, Mr Scheuer’s submissions regarding procedural fairness and the state of the evidence before the Judicial Registrar are irrelevant. Moreover, any concerns regarding the other named defendants to the Supreme Court writs could be addressed by notifying them of the Court’s decision in the present application and by making an order for liberty to apply. Any of the defendants may then make a further application challenging the reinstatement should they wish to do so. Endless Solar further contends that there is real doubt as to whether any of the defendants would be able to show any relevant prejudice arising from reinstatement itself sufficient to ground a basis on which the order for reinstatement made on 2 March 2017 might be set aside. Accordingly, Endless Solar suggests that the Court should exercise caution in determining whether to delay the determination of this application in order to address concerns regarding procedural unfairness to the other named defendants.

57    Endless Solar contends that it is a person aggrieved within the meaning of s 601AH(2)(a) in circumstances where it has a direct claim for oppression against SPA and where SPA has claims against its former directors, auditors, lawyers and administrators from which Endless Solar stands to benefit as an undisputed shareholder of SPA. Those claims have been articulated in the Supreme Court writs, and in Mr Craig’s affidavit filed in this proceeding. The claims principally concern the resolution passed by certain of SPA’s former directors to place SPA into administration on 21 March 2017 and the subsequent acquisition of SPA’s business by Speedpanel Holdings Pty Ltd (an entity controlled by at least some of those former directors) through the DOCA. Moreover, Endless Solar contends that the claims are arguable, which is all that is required for the purpose of s 601AH(2)(a): Hinz at [20] (Halley J) and the cases cited therein. Endless Solar also points to the 2019 financial statements of Speedpanel Holdings Pty Ltd, the entity that required SPA’s business, which are in evidence before me, in the apparent suggestion that the company’s profitability in that period demonstrates that there is substance to the claims advanced by Endless Solar.

58    Endless Solar further contends that the reinstatement of the registration of SPA is “just” within the meaning of s 601AH(2)(b), having regard to the principles relevant to this assessment articulated by Brereton J in Re ERB at [5] and cited in Hinz at [22].

(a)    The circumstances of SPA’s deregistration support its reinstatement. The deregistration was initiated by ASIC pursuant to s 601AB of the Act due to “corporate delinquency” – namely, the failure to pay fees or the failure to respond to ASIC. The direct cause of this delinquency was the decision of Mr Scheuer, Mr Muchnicki and Mr Bernhardt to resign their positions rather than to wind up SPA’s affairs in the ordinary way. Once these resignations took effect, SPA had no directors by which to act, including to pay fees or respond to ASIC, and to investigate or prosecute potential claims available to it. Further, those same three former directors placed SPA into administration in March 2017, and two of them are shareholders of the entity that acquired SPA’s business through the DOCA in October 2017.

(b)    The purpose of seeking reinstatement is to pursue claims brought by Endless Solar in the Supreme Court of Victoria. That purpose is not futile, in circumstances where the claims are arguable and/or “not plainly hopeless and bound to fail”: Owners of Strata Plan No. 91349 v Australian Securities and Investments Commission [2020] NSWSC 685; 147 ACSR 456 at [66] (Bell P) (Strata Plan No. 91349), citing Re Brockweir at [22] (Sifris J). In support of this proposition, and in response to the criticisms of its claims advanced by Mr Scheuer, Endless Solar relies on the following.

(i)    The claims for breach of directors’ duties are properly made in the oppression proceeding, to which SPA is a proper and necessary party. It is unnecessary for Endless Solar to commence separate proceedings in order to bring an application for leave to make derivative claims on behalf of SPA within the Supreme Court proceedings that have already been filed. Otherwise, Endless Solar can make such an application in the existing proceedings. In any event, these matters can, and should, be argued in the Supreme Court of Victoria proceedings. Moreover, once SPA has directors, it can prosecute the claims itself for the benefit of shareholders.

(ii)    The mere fact that the oppression the subject of some of the claims advanced by Endless Solar has ceased does not preclude the grant of relief under s 233 of the Act: see eg, Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [182] (Gummow, Hayne, Heydon and Kiefel JJ). It cannot therefore be said the claims are wholly without merit on that basis.

(iii)    The statutory limitation period for some, if not all, of the claims made has not yet passed. If Endless Solar is required to commence separate proceedings to obtain leave to advance claims on behalf of SPA in the filed proceedings, it will be within time to do so in respect of at least some of the claims. Further investigation into the conduct of SPA’s affairs may also reveal new facts or causes of action in respect of which the limitation periods have not begun to run.

(iv)    The Court may be satisfied that the claims that Endless Solar seeks to advance are arguable, having regard to the evidence of Mr Craig, the fact that the writs filed in the Supreme Court of Victoria were prepared by counsel, and the certification by Endless Solar’s legal representatives that the claims have a proper factual and legal basis.

(v)    As to whether the liquidator of the second plaintiff in the second writ has given consent for the proceeding to be issued, such consent can be inferred from the fact that the registry of the Supreme Court of Victoria accepted the writ for filing, in circumstances where the Supreme Court (General Civil Procedure) Rules 2015 (Vic) require a person to give their consent in writing (or in such other manner as the Court orders) to be added as a plaintiff to a proceeding.

(vi)    More generally, it is inappropriate for the Court to resolve questions of fact relevant to potential proceedings on a reinstatement application – that is properly a matter for the court or tribunal in which the substantive proceedings have been, or will be, pursued: Pilarinos v Australian Securities and Investments Commission [2006] VSC 301; 24 ACLC 775 (Pilarinos) at [29] (Gillard J); cited with approval in AMP General Insurance Ltd v Victorian WorkCover Authority (2006) 15 VR 175 (AMP General Insurance) at [42] (Maxwell P and Neave JA). The deficiencies in Endless Solar’s claims that have been identified by Mr Scheuer necessarily involve contested issues of fact. Nor does the Court need to be satisfied that each and every claim that Endless Solar may seek to advance is arguable. Rather, the Court need only conclude that there is one claim that has some chance of success.

(c)    There is no relevant prejudice arising from the reinstatement of SPA’s registration. No persons are prejudiced by the reinstatement, as distinct from any prejudice that may arise to the defendants of the legal claims that may be pursued as a result of the reinstatement. It will be a “very rare case” that merely reinstating a company will be prejudicial to a potential defendant. A potential defendant usually has no say in whether proceedings are instituted against them, and will retain all the remedies of a summary dismissal and stay in the substantive proceedings to prevent their continuation. Moreover, a court should not conclude that reinstatement would be unjust on account of considerations analogous to abuse of process or want of prosecution unless affirmatively satisfied that a fair trial could not be had, or that the proposed proceedings were doomed to fail: Re ERB at [13].

(d)    The purpose of the reinstatement and the circumstances in which SPA was deregistered together establish a clear public interest in reinstatement. The claims that Endless Solar seeks to advance concern a “potential phoenix scenario” in which a valuable business was distressed and transferred away from shareholders at a small price for the benefit of two directors, following which they and another co-director resigned, leaving SPA without directors and unable to act. It is plainly in the public interest for these matters to be further investigated and the claims arising from them to be pursued. The issues arising in relation to the calling of a meeting of the members of SPA and the appointment of directors can be managed, and are being managed, by the Court. Finally, ASIC does not oppose the reinstatement of SPA.

(e)    While there has been some delay in Endless Solar raising and pursuing the claims it now seeks to advance, and in seeking the reinstatement of SPA for that purpose, Endless Solar contends that the delay is not so significant as to preclude reinstatement. Allowance ought to be made for the effects of COVID-19 in Victoria. Moreover, in circumstances where the claims have (in Endless Solar’s submission) been brought within the statutory limitation period, the Court ought not to substitute its view of the appropriate period within which such claims should be made.

Consideration

59    I am satisfied that Mr Scheuer has a sufficient interest in the outcome of the reinstatement application that it is appropriate to join him as a defendant to this proceeding. Mr Scheuer’s interest arises in circumstances where he is a shareholder of SPA (a fact which is not contested) and as a defendant to claims that Endless Solar seeks to bring, the pursuit of which are the stated purpose for reinstatement.

60    Although the submissions advanced by each party at the hearing were detailed, the contentions advanced by Mr Scheuer to set aside the reinstatement order can be reduced to two principal propositions: first, the original order for reinstatement was made in circumstances in which there was a denial of procedural fairness, and the denial of procedural fairness has not been remedied in this rehearing; second, it would not be just to order the reinstatement of SPA’s registration having regard to its corporate history, the circumstances in which it was deregistered, the delay in bringing the application and the hopelessness of the claims sought to be pursued by Endless Solar against SPA through the Supreme Court writs.

61    The purpose of the reinstatement is to enable Endless Solar to pursue claims against, and on behalf of, SPA. It is therefore relevant to consider the merits of those claims, more specifically whether the claims are so lacking in merit that the reinstatement of SPA would not be just. In assessing the merits of proposed claims to be brought, it is not appropriate to attempt to resolve factual matters that may be the subject of dispute: Grogan at [14]; Deputy Commissioner of Taxation v Australian Securities and Investments Commission; re Civic Finance Pty Ltd (Deregistered) [2010] FCA 1411; 91 ATR 456 at [14] (Jagot J); Pilarinos at [29]. Such matters are properly dealt with by the court or tribunal in which those claims have been, or will be, brought. It is only where the proposed claims are hopeless or bound to fail, or very likely to be stayed on some other basis (such as for an abuse of process) that the Court may conclude that it is not just to reinstate the company: see Pilarinos at [106]-[107]; see also AMP General Insurance at [35] (Maxwell P and Neave JA, noting that no claim of futility arose in that proceeding). Any lesser standard would effectively require the Court to embark on a trial of the proposed proceeding which is neither principled nor practical in the context of an application for reinstatement.

62    On this application, Mr Scheuer has agitated many criticisms of the Supreme Court proceedings that have been filed by Endless Solar. The criticisms have substance. However, I have reached the view that it would be inappropriate to reach a final determination whether reinstatement would be just in circumstances where most of the proposed defendants to the Supreme Court proceedings have not been given an opportunity to be heard.

63    It is well-established that an order for reinstatement that is made in circumstances where there has been a denial of procedural fairness is invalid and is liable to be set aside. In Miltonbrook at [85] (Tobias and Campbell JJA agreeing at [102] and [103] respectively), Spigelman CJ observed that:

It is axiomatic that when a statutory power like s 601AH(2) is conferred on a court, the legislature intends that procedural fairness will be accorded to all who may be affected by the order, unless there is a clear statement to the contrary. The denial of procedural fairness by a court is a “fundamental irregularity” which would entitle a person aggrieved to set aside an order as a matter of unconditional right. (See Cameron v Cole (at 591); Taylor v Taylor (1979) 143 CLR 1 at 16.)

64    In that case, reinstatement was sought by the plaintiff for the purpose of bringing a claim against the deregistered company. An order for reinstatement, which had been made on an ex parte basis by the primary judge, was set aside principally on the basis that the potential defendants of that claim had not been notified of the application, nor provided with a reasonable opportunity to be heard.

65    Whether procedural fairness has been afforded to persons affected by reinstatement is a separate, antecedent question to that of whether it is just to reinstate the company. Properly understood, the failure to afford procedural fairness to those who may be affected by the order for reinstatement impedes the Court’s ability to consider all matters relevant to the assessment of whether it would be just to reinstate, insofar as persons affected are denied an opportunity to be heard and to raise matters that are relevant to that question.

66    The converse of the principle as expressed in Miltonbrook is that the Court ought not proceed to determine an application for reinstatement unless it can be satisfied that those persons who may be affected by an order for reinstatement – or, at least, such persons as are capable of being identified – have been afforded a reasonable opportunity to be heard on the application. In Dahozo at 741, Bryson J declined to determine an application for reinstatement made pursuant to the predecessor provision of s 601AH(2) for the purpose of pursuing proceedings on behalf of the company in circumstances where there was insufficient information before the Court as to the identity of those persons who may have an interest in the reinstatement, being either the proposed defendants in the proceedings to be pursued on behalf of the company or the directors or shareholders of the company, and whether those persons ought to be joined. Relevantly, his Honour observed (at 741-2):

A first principle for the exercise of the powers of courts is that the persons affected should be heard before a judicial decision is made against them. Audi alteram partem. For most applications there are procedural rules requiring service of notice of the application on the persons affected. There are rare instances of statutory provisions authorising the courts to act without such notice. Otherwise courts do not act in those circumstances, or if they do, the persons adversely affected are entitled to obtain reconsideration by the court of the order if they apply reasonably promptly after they learn of the order.

… When an application is made to reinstate a company to the register the persons whose interests might be adversely affected by reinstatement cannot always be identified readily or immediately, and there could be many circumstances in which the impact on some person of action taken on the basis that the company was off the register could not be perceived by the applicant or by the court. Whether or not the court’s order reserved liberty to persons so affected to apply to set the order aside, it will be open to the person who was not a party to the application to apply late to set it aside if that person had grounds on which the court should reconsider whether the court is satisfied that it is just that registration of the company be reinstated.

However, when it is known to the court that some person has an apparent interest in a reinstatement application, the court would ordinarily make a direction which would enable that person to resist, such as requiring service of notice of the application on a person, making the person respondent to the application or allowing the person to intervene. The absence of any provision in the rules of court dealing with this is not an indication that notice of an application is not necessary; it is to be explained rather by the court’s ordinarily acting in accordance with the audi alteram partem rule.

67    Justice Bryson further observed that, the fact that delay to the determination of the application would create difficulties for the plaintiffs (by reason of an expiring limitation period) was immaterial in light of the plaintiffs’ responsibility for the delay and the importance of considering the interests of those affected (at 741).

68    Similarly, in Liberty International Underwriters v Australian Securities and Investments Commission, in the matter of Moore Murphy Holdings Pty Ltd [2021] FCA 103 at [28], McKerracher J concluded that further time ought to be allowed before determining an application for reinstatement for the purpose of pursuing proceedings on behalf of the company to afford the defendant to those proceedings a reasonable opportunity to respond to the application. His Honour ultimately made orders providing a period within which any person or party opposing the application could indicate their opposition to the Court, failing which the company would be reinstated.

69    A similar approach was taken in Manny v David Lardner & Associates [2018] ACTSC 159, in which orders were sought to reinstate three entities pursuant to s 601AH(2) of the Act, and to stay the winding up of the companies on their reinstatement, for the purpose of enabling the plaintiff to pursue claims on behalf of the companies. Associate Justice McWilliams (as her Honour then was) made orders requiring the creditors of the companies to be served with a copy of her Honour’s reasons in the reinstatement application before final orders granting the application were made, to enable any creditor to seek to be heard in circumstances where her Honour could not be satisfied that all creditors had been served with the reinstatement application. Her Honour found that, while it was unlikely that the creditors would be adversely impacted by the reinstatement, it was not for the Court to “pre-empt what the creditors might say if they were given an opportunity to be heard” (at [42]).

70    The concern of the law with respect to procedural fairness is to avoid practical injustice: Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1 at [37] (Gleeson CJ). In the context of an application for reinstatement, there may be circumstances in which procedural fairness does not require all persons who may be potentially affected by reinstatement to be notified of the application. For example, if the Court concludes that a claim proposed to be brought by a reinstated company against a proposed defendant is hopeless, it would be unnecessary to hear from the defendant: Fletcher (as liquidators of Octaviar Administration Pty Ltd) v Anderson [2014] NSWCA 450; 292 FLR 269 at [64] (Barrett JA, with Beazley P and McColl JA agreeing at [1] and [2] respectively).

71    On the present application, Endless Solar placed considerable reliance on the statements of Brereton J in Re ERB that “on an application for reinstatement, the court is concerned with the justice of reinstating the company — not the justice of any proceedings which it proposed that the reinstated company might institute or resume” (at [10]) and (at [13]):

It will be a very rare case that merely reinstating a company will be prejudicial to a potential defendant. That potential defendant still has available all the remedies of summary dismissal and stay in the substantive proceedings, if they are instituted. All he or she is deprived of is the opportunity to prevent the proceedings even being instituted — an issue on which a defendant usually has no say. In my view, a court should not, on a reinstatement application, conclude that reinstatement would be unjust on account of considerations analogous to abuse of process or want of prosecution unless affirmatively satisfied that a fair trial could not be had, or that the proposed proceedings were doomed to fail. Consistently with what the Victorian Court of Appeal said, such questions can usually only been addressed once the cause of action has been formulated and pleaded and the issues defined, and are best examined by the court in which the substantive proceedings are conducted.

72    It is important to note that no question of procedural fairness arose in Re ERB. Brereton J observed that notice of the application had been given to those who, as a result of reinstatement, might be exposed to proceedings by the company (at [2]). Rather, his Honour’s observations at [10] and [13] concerned the question of whether reinstatement would be just, and the extent to which the Court should enquire into the merits of the proposed proceeding.

73    The persons affected by the reinstatement in the present application can be readily identified. They comprise Mr Scheuer and the other named defendants in the two Supreme Court writs. I will deal with each of Mr Scheuer and the other defendants in turn.

74    I accept that Mr Scheuer was denied procedural fairness in the hearing of the application for reinstatement before Judicial Registrar Luxton in circumstances where Mr Scheuer was not notified of the application (and did not in fact become aware of it until after an order for reinstatement was made) and did not have an opportunity to be heard in respect of the application. However, this deficiency has since been remedied. Mr Scheuer had a full opportunity to present his case in opposition to reinstatement on the hearing of the present application, which was conducted as a de novo hearing.

75    The other named defendants in the writs stand in a different position to Mr Scheuer. I consider that these persons have an interest in the present application and a right to be heard in relation to it. The named defendants – who are readily identifiable – stand to be affected by the reinstatement of SPA insofar as they may become defendants in active litigation (assuming the writs are served and Endless Solar chooses to prosecute the claims).

76    There is no evidence before me to indicate that the defendants named in the two writs were notified of the application for reinstatement when it was first made in February 2023, or that they were otherwise given a reasonable opportunity to be heard at the hearing before Judicial Registrar Luxton. The two writs were not filed until 6 March 2023 and 17 March 2023 respectively, after the order for reinstatement was made on 2 March 2023. Nonetheless, I infer that the identity of the proposed defendants would have been known to Endless Solar at the time when the application for reinstatement was first made to this Court. The pursuit of those claims was the sole basis on which the reinstatement of SPA was sought.

77    Nor is there any evidence before me to indicate that the named defendants in the two writs were notified of the application for review made by Mr Scheuer on 14 April 2023, and none of the named defendants (with the obvious exception of Mr Scheuer) have appeared before me on this application. I therefore cannot be satisfied that these persons have been notified of the application and that they have been given a reasonable opportunity to be heard.

78    In my view, procedural fairness requires that the defendants named in the Supreme Court writs (other than Mr Scheuer) are notified of this application, and that they are afforded an opportunity to be heard on the application before it is finally determined. Considerations of efficiency, cost effectiveness or, in the case of the applicants, the possible operation of statutory limitations periods, cannot outweigh the importance of ensuring that the requirements of procedural fairness are observed. It is possible that the other defendants, should they seek to be heard, will not be able to demonstrate that they will be adversely affected beyond the fact of being made a defendant to proceedings (which is not, as Brereton J observed in Re ERB, ordinarily a prejudice of the kind that will weigh against reinstatement). It is also possible that the other defendants will not be able to add meaningfully to the matters already raised by either Mr Scheuer or Endless Solar in the present application. However, the Court cannot, and should not, pre-empt the matters that those persons may seek to raise. The Court cannot be satisfied that it has all material before it relevant to, and necessary for the determination of, this application unless and until the other defendants are informed and their objections to reinstatement, if any, are heard.

79    I do not accept that it would be appropriate in the present case to determine the application in the absence of the other defendants and afford them liberty to apply to set aside the reinstatement. Procedural unfairness of this kind is a fundamental irregularity in the Court’s process: Miltonbrook at [85] (Spigelman CJ). As Mr Scheuer correctly submitted, the Court cannot make an order with respect to the reinstatement in the knowledge that it is infected by a fundamental irregularity. Importantly also, the defendants’ interest in the reinstatement affords them a right to be heard in this application, not in any subsequent application that they may wish to bring challenging the decision made.

80    It follows that the initial decision to reinstate made by Judicial Registrar Luxton was procedurally unfair with respect to the named defendants other than Mr Scheuer and that it is liable to be set aside on that basis. However, having regard to the de novo nature of the Court’s task in the present application, the unfairness occasioned to the other defendants in the hearing of the initial application for reinstatement can be remedied in the present application if the other defendants are notified of this application and permitted a period of time within which they may approach the Court to be heard on the matter, should they wish to do so. Until such notice is given, and any defendant to the two writs (other than Mr Scheuer) is given an opportunity to be heard, the appropriate course is to adjourn the present application part heard.

Conclusion

81    For the reasons given above, I will make the following orders:

(a)    Nathan Joseph (Nick) Scheuer, in his personal capacity and in his capacity as trustee of the Asher & Wald Trust), be joined as the second defendant to the proceeding.

(b)    By 4 pm on 7 July 2023, the plaintiff is to serve sealed copies of these reasons and my orders of the same date on all persons named as defendant in the writ dated 6 March 2023 and filed in the Supreme Court of Victoria proceeding ECI 2023 00852 and in the writ dated 17 March 2023 and filed in the Supreme Court of Victoria proceeding S ECI 2023 01060.

(c)    By 4 pm on 21 July 2023, any person on whom a copy of these reasons has been served in accordance with subparagraph (b) and who opposes the reinstatement of the registration of Speedpanel Australia Ltd ACN 107 723 240 may indicate their opposition by filing and serving on the parties a notice of objection and sending a copy by email to the chambers of O’Bryan J.

(d)    The proceeding be listed for case management at 9.30am on 28 July 2023.

Associate:

Dated:    30 June 2023