Developer reinstated to face Building Defects Proceeding
An interesting case which rewards a stubborn Owners Corporation - in a nutshell:
In the Owners of Strata Plan No 91349 v Australian Securities and Investments Commission [2020] NSWSC 685 the Owners Corporation was granted with an order under section 601AH(2) of the Corporations Act 2001 (Cth), to have the Developer of the Scheme reinstated by the Australian Securities and Investments Commission (ASIC).
The Supreme Court found that The Owners Corporation met the description of "a person aggrieved by the deregistration" within the meaning of s 601AH of the Corporations Act.
The Owners Corporation had a claim against the Developer for breach of statutory warranties under section 18B of the Home Building Act 1989 and held that a creditor of a company which has been deregistered, and who or which has thereby been precluded from bringing its claim against the company, is “a person aggrieved by the deregistration".
The Court considered the utility to the reinstatement and stated that the Owners Corporation's claim was sufficiently strong to amount to a legal entitlement to have the Developer reinstated and that in any event the Court, on a reinstatement application, should not engage in too close a scrutiny of these substantive claims or their strength. The substantive claims must simply be shown to have some level of arguability. The threshold to meet is therefore low.
Owners Corporations often feel exposed to the risk of voluntary administration of Builders and Developer, prior to, during or even after the conclusion of legal proceedings, but there are avenues to force the reinstatement of a company in certain circumstances.
Owners Corporations must act promptly in filing their claims against the proper entities but must also assess the assets and reputation of the Developer and Builder to ascertain the risks of possible deregistration. ASIC allows a third party to be alerted of requests of deregistration by a specific company so that a claim to stop the deregistration could be made without engaging the legal proceedings for the reinstatement.
Always seek legal advice to navigate those matters and have your circumstances properly assessed.