Supreme Court New South Wales

• Medium Neutral Citation: In the matter of DJG Equities Pty Ltd [2014] NSWSC 194
• Hearing dates: 20 February 2014
• Decision date: 20 February 2014
• Jurisdiction: Equity Division - Corporations List
• Before: Black J

Decision

Order made for rectification of records maintained by the Australian Securities and Investment Commission in respect of the shareholding of the first defendant

• Catchwords: CORPORATIONS -application for rectification of records maintained by ASIC - where judgment had been made that transfer of shares was a voidable transaction - whether records maintained by ASIC are capable of rectification - whether the Court has power to rectify records where content of notification required to be given to ASIC was incorrect.
• Legislation Cited: - Corporations Act 2001 (Cth) ss 588FE, 588FF, 1274, 1274A, 1322(4)(b); - Corporations Regulations 2001 (Cth) regs 9.1.01, 9.1.02(a)
• Cases Cited: - Demetriou v Gusdote Pty Ltd [2010] FCA 581; (2010) 78 ACSR 566; - In the matter of DJG Equities Pty Ltd [2014] NSWSC 36; - Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38; (2008) 71 NSWLR 262; 65 ASCR 545; - Re Botanical Water Holdings Pty Ltd; Agao Nominees Pty Ltd v AJ Phoenix Pty Ltd [2013] VSC 96; - Re MIG Property Services Pty Ltd (No 2) [2012] VSC 606; (2012) 92 ACSR 234
• Category: Interlocutory applications
• Parties: Antony Resnick and Brian Raymond Silvia in their capacity as liquidators of DJG Securities Pty Ltd (in liquidation) (First Plaintiff); Antony Resnick and Brian Raymond Silvia in their capacity as receivers of the assets of the D&T Family Discretionary Trust (Second Plaintiff); DJG Equities Pty Ltd (First Defendant); Stephen Craig Hitchings (Second Defendant); Argyle Investments & Securities Pty Ltd (Third Defendant); Autohaus Wholesalers Pty Ltd (Fourth Defendant)
• Representation: Counsel: T Sperber (Plaintiffs); D Raftesath (Defendants); Solicitors: Swaab Attorneys (Plaintiffs); Meridian Lawyers (Defendants)
• File Number(s): 2013/356731

Judgment - ex tempore

1 By Originating Process filed 26 November 2013, the Plaintiffs, Messrs Resnick and Silvia, as liquidators ("Liquidators") of DJG Securities Pty Ltd ("Securities") sought a declaration that the transfer of 1,000 shares in the first defendant, DJG Equities Pty Ltd ("Equities") by Securities to the second defendant, Mr Hitchings, on or about 14 May 2013 was voidable under s 588FE of the Corporations Act 2001 (Cth) and an order under s 588FF of the Corporations Act that the transfer was void as at and after the date it was made. By short minutes of order proposed at the hearing of that Originating Process, the Plaintiffs also sought an order that the register maintained by the Australian Securities and Investments Commission ("ASIC") in relation to the shareholding in Equities be rectified to record Securities as the holder of the 1,000 shares in Equities, the position prior to the challenged transfer.

2 In my judgment delivered on 7 February 2014 ([2014] NSWSC 36), I made the first and second orders sought in the Originating Process, declaring the relevant transfer to be void, but did not make an order for rectification of the register maintained by ASIC in respect of Equities where ASIC was not party to the proceedings and had not been given notice of that application. I granted leave to the Liquidators to restore the matter should they pursue the application to rectify the register after having given notice of that application to ASIC.

3 By Interlocutory Process filed by leave on 20 February 2014, the Liquidators pursued an application for rectification of the register maintained by ASIC in respect of Equities. The Second, Third and Fourth Defendants consent to the orders sought. The First Defendant, Equities, is not in a position to do so since it currently has no directors. The Liquidators' solicitors have given notice of the application to ASIC, which has indicated that it neither opposes nor consents to the orders sought.

4 The application is brought under s 1322(4)(b) of the Corporations Act which provides that the Court may, on the application of an interested person, make an order directing the rectification of any register kept by ASIC under the Corporations Act. The Liquidators are plainly interested persons, where the position presently recorded in ASIC's records in respect of Equities reflects the result of the transfer by which Securities was deprived of its shareholding in Equities, which I have held to be void. The application raises two questions of law, first, whether the register marked by ASIC which is sought to be rectified is a register which is capable of rectification under s 1322(4)(b) of the Corporations Act and, second, whether the power of rectification under s 1322(4)(b) of the Corporations Act permits rectification of such a register where a dealing was required to be notified by statute, but the content of that notification was incorrect. Each of those questions has been considered in recent authorities.

5 First, the power of rectification of a register under s 1322(4)(b) of the Corporations Act extends to permit the rectification of a register maintained by ASIC under s 1274 of the Corporations Act, which requires ASIC to keep such registers as it considers necessary in such form as it thinks fit, and also to those registers that are prescribed under reg 9.1.01 of the Corporations Regulations 2001 (Cth). In Re MIG Property Services Pty Ltd (No 2) [2012] VSC 606; (2012) 92 ACSR 234 at [64], Robson J was prepared to infer that a database maintained by ASIC under s 1274A of the Corporations Act, was an extract of the register of companies prescribed under reg 9.1.01(a) of the Corporations Regulations. I would draw the same inference in respect of the database from which the historical company extract for Equities, tendered in these proceedings, has been prepared. I note that the information contained in that register would include, by reg 9.1.02(a) of the Corporations Regulation, information as to the paid-up capital of the company, and the information sought to be rectified in this case relates to the ownership of the shares in Equities. I conclude that the information which the Liquidators seek to rectify is prescribed information concerning the company's shareholding contained in the prescribed register of companies, here relating to the shareholding in Equities.

6 Second, although this question has been the subject of differences of view in the case law, more recent case law indicates that the Court has power to rectify such a register under s 1322(4)(b) of the Corporations Act, so as to correct incorrect information which was included in a notification required to be given to ASIC. A broad view of the scope of rectification under s 1322(4)(b) of the Corporations Act was taken by the Court of Appeal in Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38; (2008) 71 NSWLR 262; 65 ASCR 545 at [45]ff and also by Robson J in Re MIG Property (No 2) above. In that case, his Honour treated the power under s 1322(4)(b) as sufficiently wide to allow rectification of the register where the process by which the event had been included in the register was invalid. In an earlier case, Demetriou v Gosdote Pty Ltd [2010] FCA 581; (2010) 78 ACSR 566 at [33], an order for rectification of ASIC's records was made, albeit without extended reasoning, in a similar case to the present case, where a change to the shareholding of a company had been made such that ASIC's records did not then reflect the true position. In Re Botanical Water Holdings Pty Ltd; Agao Nominees Pty Ltd v AJ Phoenix Pty Ltd [2013] VSC 96, Robson J similarly ordered that ASIC's register of companies be rectified where his Honour found that a change to the shareholding recorded in that register had not been validly made.

7 I would adopt the broader view of the scope of s 1322(4)(b) of the Corporations Act taken in the authorities to which I have referred above. In this case, the process leading to entry of the current information in ASIC's register of the shares in Equities was invalid, so far as it was founded on a notification to ASIC of a share transfer that the Court has held to be void. The correct position, reflecting the invalidity of that transfer, is that which the Liquidators seek to have recorded in the register maintained by ASIC. This seems to me to be sufficient to support the order for rectification of the ASIC's register now sought by the Liquidators. Such an order will not, of course, require ASIC to take any action in respect of those forms which were previously filed with ASIC from which ASIC extracted the information now included in the prescribed register of companies, which may remain accessible as a matter of record, as distinct from recording the true position reflecting the outcome in my earlier judgment in the register as it now stands.

8 Accordingly, I make the following order:

1. That the Australian Securities & Investments Commission register in relation to the shareholding of DJG Equities Pty Limited (ACN 147 086 780) (the first defendant) be restored to record DJG Securities Pty Limited (ACN 135 852 792) (in liquidation) (the first plaintiff) as the holder of all 1,000 shares in DJG Equities Pty Limited (ACN 147 086 780).

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Decision last updated: 12 March 2014