Australia: Bringing a claim directly against an insurer (instead of deregistered defendant) pursuant to section 601AG of the Corporations Act 2001

When investigating a potential claim against a corporate defendant a claimant may learn that the corporate defendant is in fact deregistered. In those circumstances, it is important for the claimant to give consideration to whether there may have been in place an insurance policy which covered the defendant's liability to the claimant immediately before deregistration. It may be appropriate for the claimant to bring a derivative action directly against the insurer pursuant to s601AG of the Corporations Act. It is important for lawyers advising claimants, those connected to a deregistered corporate defendant and/or the relevant insurer to be familiar with the mechanics and legal principles surrounding claims made pursuant to s601AG. This may be relevant when advising on a broad range of claims including where a potential corporate defendant is deregistered and an insurance policy for professional indemnity, public liability or workers compensation may apply.

Section 601AG of the Corporations Act 2001 provides as follows:

Claims against insurers of deregistered company
A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:
  1. the company had a liability to the person; and
  2. the insurance contract covered that liability immediately before deregistration

The purpose of s601AG was examined by Adamson J in Sciacca v Langshaw Valuations Pty Ltd [2013] NSWSC 1285. His Honour states at [27], "The evident purpose of s601AG is to obviate the need for a claimant who wishes to make a claim against a corporate insured which has become deregistered to apply for the insured to be reinstated for the sole purpose of having the insurer act for the corporate insured by subrogation." Adamson J also makes reference to the comments of Ipp JA (with whom Hodgson JA and Hunt AJA agreed) in Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; 62 NSWLR 148, including:

"In my view, the purpose of the legislature in inserting s 601AG in the Corporations Act is to require the insurer of a deregistered company to stand in the shoes of the company to the extent necessary to allow creditors of the company to recover from the insurer whatever amounts they were entitled, by force of law, to recover from the company had it not been deregistered. This purpose is discernible from the section as a whole and the Explanatory Memorandum ..."

A number of pertinent points to highlight, which may be gleaned from recent case law across various Australian state jurisdictions, include:

  1. s601AG creates a new cause of action and leave of the Court is not required

Section 601AG creates a new cause of action and is not a claim for damages. It is for an amount that was payable to the deregistered company under the relevant insurance contract (see for example Kelley v Western Pacific Insurance Ltd [2010] NSWSC 1397 and Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd (2005] NSWCA 19; {2005) 62 NSWLR 148)

  1. The conditions imposed by s601AG mean that the time "immediately before deregistration" is key

Ipp JA (with the concurrence of Hodgson JA and Hunt AJA) comments in Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; (2005) 62 NSWLR 148 [19]) as follows:

"The two conditions [imposed by s601AG] are expressed in the past tense. The inference is that the time for determining whether the deregistered company had a liability to the person claiming, and whether the insurance contract covered that liability, is "immediately before deregistration" (being the phrase qualifying condition (b))."
  1. It is not necessary to first have a judgment against the deregistered company before making a s601AG claim

In a number of cases, insurers have unsuccessfully attempted to argue that the insured company had a liability to the claimant only when established by a judgment or award against the insured company (or even a settlement). McCallum J rejected that argument in Tzaidas v Child & Ors [2009] NSWSC 465 and was against the proposition that the term "liability' in s601AG is confined to a liability that was ascertained, crystallised or determinate immediately before deregistration (at [25]). In Hutchinson v ASIC [2001] VSC 465 (unreported, Supreme Court of Victoria), Master Mahony rejected such an argument from the insurer and stated that s601AG applies if the claimant has, immediately prior to deregistration, a fully constituted cause of action against the company – which does not mean a cause of action which is certain to succeed, but one which, without it being defended, would have succeeded.

  1. It is not necessary that the deregistered company in fact made a claim against the insurer before making a s601AG claim

The case of Sciacca v Langshaw Valuations Pty Ltd [2013] NSWSC 1285 involved consideration of that question. Adamson J states [at 61], "In order to fulfil the purpose of the section, there does not appear to be any reason why Parliament intended to provide for proceedings to be brought against the insurer only in circumstances where the insured had a cause of action against its insurer prior to deregistration by reason of a prior claim having been made." Adamson J also states [at 58] "I respectfully adopt McCallum J's interpretation of s601AG(b) in Tzaidas. In my view the words, "the insurance policy covered that liability" mean no more than that the risk that ensued was one which was within the scope of the policy. I read the section as requiring that the liability of the insured to the claimant fall within the cover provided by the Policy, as distinct from requiring that the insurer be liable to the insured prior to the deregistration by reason of a claim having been made prior to that time, that would trigger the insured's right to indemnity under the Policy."

  1. When does the limitation period for a s601AG claim commence?

The limitation period within which the claimant might pursue a s601AG claim commences on the deregistration of the insured company. In Roy Atkin Johnstone v Broad Group Holdings Pty Limited & Ors [2011] NSWDC 181, Judge Sidis, in referring to the case of Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; 62 NSWLR 148, comments [at 20] "At [15] Justice Ipp noted that his Honour Judge Walmsley of this Court, at first instance, relied upon Pagnon v WorkCover Queensland 920010 2 Qd R 492 to hold that a limitation period for s 601AG actions began to run on deregistration of the company and that this finding was not challenged on appeal. Nor did the Court of Appeal take issue with the proposition. Rather, Justice Ipp, with whom Justice Hodgson and Acting Justice Hunt agreed, endorsed it."

  1. The company must be deregistered and not in the course of being wound up

If the insured company is still in the process of being wound up, then a cause of action under s601AG is not available. Pullin JA (with whom Newnes JA and Murphy JA agreed) in Fairwater Pty Ltd v QBE Insurance (Ausralia) Ltd [2012] WASCA 270 states at [4], "The new cause of action does not arise until the company having the benefit of the insurance is deregistered. Any defences that an insurer may have had at that point to an action on the insurance contract may be pleaded by it in defence to the s601AG claim and any defence the insured may have had to the claim against the insured may be advanced to show that the insured had no liability to the plaintiff."

In Kelley v Western Pacific Insurance Ltd [2010] NSWSC 1397, Barrett J states [at 9], "The cause of action does not arise until the company, having the benefit of the insurance, is deregistered; and any defences that the insurer may have had at that point to an action on the insurance contract may be pleaded by it in defence to the s 601AG claim. This follows from paragraph (b) of the section which has regard to the cover actually provided by the contract of insurance immediately before deregistration."

  1. It may be far more economical and convenient to bring a s601AG claim rather than a claim for reinstatement under s601AH of the Corporations Act 2001 and where a s601AG claim is available the Court may not allow a s601AH claim in any event

There are many cases where the Courts have indicated that where there is available a claim under s601AG, it may not only be unnecessary but misconceived for a claimant to bring an application for reinstatement under s601AH. If it is appropriate to proceed directly against the insurer under s601AG, a company will not generally be reinstated. In dealing with a s601AH application, it is necessary that the Court be "satisfied that it is just that the company's registration be reinstated."

Whilst there are cases which involve unusual complexities and it may be necessary to apply to reinstate the company (for example in order to assist in establishing the obligations which might exist under several insurance policies) the comments of Campbell J in Krstevska v ACN 010 505 012 Pty Ltd [2001] NSWSC 1093 at [18] should always be borne in mind:

"If the proper construction of section 601AG is that it applies to a situation where a company has done something which results in it having a legal liability at the time of its deregistration, that legal liability has not been established either by liability or acknowledgment at the time of deregistration, but there is an insurance policy in place which would sufficiently cover the liability once it was established, then in some cases it would be easier to simply rely on section 601AG to sue the insurer rather than go through the complex procedure of taking a company out of deregistration. This is particularly so when taking the company out of deregistration revives it for all purposes, not just for the purpose of bringing the litigation which is the immediate occasion for bringing it out of liquidation, and when taking the company out of deregistration involves the cost and trouble of notifying ASIC, notifying any liquidator and taking court proceedings."

Section 601AG may provide a very useful tool to bring a derivative action for recovery directly against an insurer without having to go through the expense, inconvenience and delay involved in first bringing an application for the reinstatement of the defendant company. It is important to recognise that the Courts will generally not, in any event, grant an application for reinstatement of a deregistered company where it is appropriate for the claimant to instead proceed directly against the insurer under s601AG of the Corporations Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.