A company director has been able to avoid a $170,000 penalty by obtaining an order that his deregistered company be reinstated.
Richard Scott Perrin made the application to the Australian Securities and Investment Commission (ASIC) on February 7 after he received a Director Penalty Notice (DPN), as director of RSP Group Pty Ltd, for failing to pay ASIC fees. The company had been deregistered almost three years earlier, in May 2021.
Mr Perrin tried to appoint a liquidator in order to have the DPN remitted within the 21-day period it allowed, but liquidation could not be initiated because the company was not registered. Further, an application to ASIC to reinstate the company in order to appoint a liquidator was unlikely to be completed within 21 days.
His only option was to apply for an order under Section 601AH(2) of the Corporations Act 2001 (Cth) for ASIC to reinstate the company.
On February 21, Justice Strk in the Supreme Court of Western Australia granted the application.
Justice Strk said the court was obliged to consider the circumstances in which the company came to be deregistered; whether if an order was made, good use would be made of it; and whether any person was likely to be prejudiced by the reinstatement.
“There was troubling evidence before the court that Mr Perrin was acting in accordance with professional accounting and taxation advice when he allowed RSP Group Pty Ltd to lapse on its registration requirements with ASIC, so as to allow for deregistration to occur in circumstances where he believed RSP Group Pty Ltd to be insolvent,” she said.
She said it was just that RSP Group Pty Ltd be reinstated so a liquidator could be appointed and it placed into a creditors’ voluntary liquidation.
She said there was evidence the entity was insolvent when it was deregistered, and that it had not traded for a considerable period, and the public interest supported the liquidation of an insolvent entity.
Except for the re-registration procedure, there was no apparent prejudice to ASIC by the making of the order, and Mr Perrin had undertaken to pay all administrative fees, she said.
Justice Strk said there was sufficient evidence to conclude that it was “just’” to order the reinstatement of RSP Group Pty Ltd without needing to consider whether the interests of the Deputy Commissioner would be positively served.
“I proceeded on the basis that deregistration of RSP Group Pty Ltd had been the sanction for some payment or lodgement default by it,” she said.
“On balance, I did not consider that that procedural default should be allowed to have the substantive effect of precluding Mr Perrin from doing what the Taxation Administration Act, sch 1 contemplated that a director might do to avoid his personal liability for a penalty.
“In all of the circumstances, including by reference to the public interest, I was satisfied that there was benefit in having RSP Group Pty Ltd reinstated so as to be wound up, and that in all of the circumstances it was ‘just’ to order its reinstatement.”
Justice Strk’s orders included terms to allow for the swift reinstatement of RSP Group Pty Ltd by ASIC, and for Mr Perrin to pass a special resolution under s 49(1) of the Act once it had been. She made no order as to costs.
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