Baird v ACN 079 121 136 Pty Ltd (in liq)

[2013] FCA 543

FEDERAL COURT OF AUSTRALIA

Baird v ACN 079 121 136 Pty Ltd (in liq) [2013] FCA 543

Citation:		Baird v ACN 079 121 136 Pty Ltd (in liq) [2013] FCA 543
Parties:		JANICE BAIRD, WILLIAM CHARLES BENNETT, JANICE IRENE BENNETT, FREDERICK BURDELL, DAWN DRANE BURDELL, OLGA MARIA CASTINO, CARLO GUISEPPE CASTINO, PETER ANTHONY COLLEY, JUDITH ANNE COLLEY, BERNARD LOUIS DE CHERMONT, CATHERINE MARIE JEANNE DE CHERMONT, PATRICK JOHN HASTIE, CATHERINE ELIZABETH HERRIOTT, PETER RAYMOND HIGGINS, SHANE JARRETT, MARCELLE JARRETT, BRYAN DESMOND JONES, VICKY JONES, COLIN RAYMOND KIRKMAN, ESTELLE MARGARET KIRKMAN, BRYAN LOBEGEIGER, FRANCES LOBEGEIGER, JOHN WINSTON MAY, MARILYN MARGARET MAY, LEWIS FRANCIS MULLER, LORRAINE ROBYN MULLER, GEOFFREY WINSTON PETERS, JEANNETTE IVY PETERS, STEVE PLOZZA, LORELLA PLOZZA, ROSA LA ROSA, STELLA CONSTANCE RUSSO, GREGORY JAMES SIMPSON, KRISTINE MELINA SIMPSON, KENNETH SPAIN, IRENE SPAIN, WILLIAM CHARLES STEVENSON, PENNY ANN STEVENSON, GARY DAVID WILDMAN, VILMA WILDMAN, ROBERT WILLIAM WYATT and GRACE FLORENCE WYATT v ACN 079 121 136 PTY LTD (IN LIQUIDATION)
File number:		VID 985 of 2010
Judge:		GORDON J
Date of judgment:		31 May 2013
Date of hearing:	Determined on the papers
Date of last submissions:	28 May 2013
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	10
Counsel for the Applicants:	Mr M Bearman
Solicitor for the Applicants:	HDL Legal & Consulting
Solicitor for the Respondent:	Gadens Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 985 of 2010

BETWEEN:

JANICE BAIRD
First Applicant

WILLIAM CHARLES BENNETT
Second Applicant

JANICE IRENE BENNETT
Third Applicant

FREDERICK BURDELL
Fourth Applicant

DAWN DRANE BURDELL
Fifth Applicant

OLGA MARIA CASTINO
Sixth Applicant

CARLO GUISEPPE CASTINO
Seventh Applicant

PETER ANTHONY COLLEY
Eighth Applicant

JUDITH ANNE COLLEY
Ninth Applicant

BERNARD LOUIS DE CHERMONT
Tenth Applicant

CATHERINE MARIE JEANNE DE CHERMONT
Eleventh Applicant

PATRICK JOHN HASTIE
Twelfth Applicant

CATHERINE ELIZABETH HERRIOTT
Thirteenth Applicant

PETER RAYMOND HIGGINS
Fourteenth Applicant

SHANE JARRETT
Fifteenth Applicant

MARCELLE JARRETT
Sixteenth Applicant

BRYAN DESMOND JONES
Seventeenth Applicant

VICKY JONES
Eighteenth Applicant

COLIN RAYMOND KIRKMAN
Nineteenth Applicant

ESTELLE MARGARET KIRKMAN
Twentieth Applicant

BRYAN LOBEGEIGER
Twenty-First Applicant

FRANCES LOBEGEIGER
Twenty-Second Applicant

JOHN WINSTON MAY
Twenty-Third Applicant

MARILYN MARGARET MAY
Twenty-Fourth Applicant

LEWIS FRANCIS MULLER
Twenty-Fifth Applicant

LORRAINE ROBYN MULLER
Twenty-Sixth Applicant

GEOFFREY WINSTON PETERS
Twenty-Seventh Applicant

JEANNETTE IVY PETERS
Twenty-Eighth Applicant

STEVE PLOZZA
Twenty-Ninth Applicant

LORELLA PLOZZA
Thirtieth Applicant

ROSA LA ROSA
Thirty-First Applicant

STELLA CONSTANCE RUSSO
Thirty-Second Applicant

GREGORY JAMES SIMPSON
Thirty-Third Applicant

KRISTINE MELINA SIMPSON
Thirty-Fourth Applicant

KENNETH SPAIN
Thirty-Fifth Applicant

IRENE SPAIN
Thirty-Sixth Applicant

WILLIAM CHARLES STEVENSON
Thirty-Seventh Applicant

PENNY ANN STEVENSON
Thirty-Eighth Applicant

GARY DAVID WILDMAN
Thirty-Ninth Applicant

VILMA WILDMAN
Fortieth Applicant

ROBERT WILLIAM WYATT
Forty-First Applicant

GRACE FLORENCE WYATT

Forty-Second Applicant

AND:

ACN 079 121 136 PTY LTD (IN LIQUIDATION)
Respondent

JUDGE:	GORDON J
DATE OF ORDER:	31 MAY 2013
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.Pursuant to s 500(2) of the Corporations Act 2001 (Cth), the applicants have leave to continue these proceedings against the respondent, such leave being limited to the applicants’ and respondent’s preparation for, and attendance at, the mediation described in paragraph 2 of these orders.

2.Pursuant to Rule 28.02 of the Federal Court Rules 2011, the proceeding be referred to mediation by a Registrar of the Court, to be conducted no later than 31 July 2013.  The mediator is to report the result of the mediation to the Court by 2 August 2013.   

3.The further hearing of the applicants’ interlocutory process dated 6 May 2013 be adjourned to 9 August 2013 at 9:30am.

4.Costs reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 985 of 2010

BETWEEN:

JANICE BAIRD
First Applicant

WILLIAM CHARLES BENNETT
Second Applicant

JANICE IRENE BENNETT
Third Applicant

FREDERICK BURDELL
Fourth Applicant

DAWN DRANE BURDELL
Fifth Applicant

OLGA MARIA CASTINO
Sixth Applicant

CARLO GUISEPPE CASTINO
Seventh Applicant

PETER ANTHONY COLLEY
Eighth Applicant

JUDITH ANNE COLLEY
Ninth Applicant

BERNARD LOUIS DE CHERMONT
Tenth Applicant

CATHERINE MARIE JEANNE DE CHERMONT
Eleventh Applicant

PATRICK JOHN HASTIE
Twelfth Applicant

CATHERINE ELIZABETH HERRIOTT
Thirteenth Applicant

PETER RAYMOND HIGGINS
Fourteenth Applicant

SHANE JARRETT
Fifteenth Applicant

MARCELLE JARRETT
Sixteenth Applicant

BRYAN DESMOND JONES
Seventeenth Applicant

VICKY JONES
Eighteenth Applicant

COLIN RAYMOND KIRKMAN
Nineteenth Applicant

ESTELLE MARGARET KIRKMAN
Twentieth Applicant

BRYAN LOBEGEIGER
Twenty-First Applicant

FRANCES LOBEGEIGER
Twenty-Second Applicant

JOHN WINSTON MAY
Twenty-Third Applicant

MARILYN MARGARET MAY
Twenty-Fourth Applicant

LEWIS FRANCIS MULLER
Twenty-Fifth Applicant

LORRAINE ROBYN MULLER
Twenty-Sixth Applicant

GEOFFREY WINSTON PETERS
Twenty-Seventh Applicant

JEANNETTE IVY PETERS
Twenty-Eighth Applicant

STEVE PLOZZA
Twenty-Ninth Applicant

LORELLA PLOZZA
Thirtieth Applicant

ROSA LA ROSA
Thirty-First Applicant

STELLA CONSTANCE RUSSO
Thirty-Second Applicant

GREGORY JAMES SIMPSON
Thirty-Third Applicant

KRISTINE MELINA SIMPSON
Thirty-Fourth Applicant

KENNETH SPAIN
Thirty-Fifth Applicant

IRENE SPAIN
Thirty-Sixth Applicant

WILLIAM CHARLES STEVENSON
Thirty-Seventh Applicant

PENNY ANN STEVENSON
Thirty-Eighth Applicant

GARY DAVID WILDMAN
Thirty-Ninth Applicant

VILMA WILDMAN
Fortieth Applicant

ROBERT WILLIAM WYATT
Forty-First Applicant

GRACE FLORENCE WYATT

Forty-Second Applicant

AND:

ACN 079 121 136 PTY LTD (IN LIQUIDATION)
Respondent

JUDGE:	GORDON J
DATE:	31 MAY 2013
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. By an interlocutory application dated 6 May 2013, the applicants seek leave to continue these proceedings against the respondent under s 500(2) of the Corporations Act 2001 (Cth) (the Act).  For the reasons that follow, I would grant that leave on specific terms.

2. This proceeding was filed in 2010.  The respondent is insured and the claim subrogated to the insurers. 

3. A mediation was to be held by the end of November 2012. That mediation was not held for two reasons; the applicants were completing loss and damage calculations and, no less importantly, on 4 October 2012, the applicants were informed that the respondent had been placed in liquidation as a result of a creditors’ voluntary winding up. The liquidation stayed these proceedings: s 500(2) of the Act.

4. The unusual feature of this application is that the respondent was wound up on 6 September 2011.  That fact was not brought to the attention of the solicitors for the applicants or even the solicitors for the respondent (the insurer) until about October 2012.  The applicants’ solicitors had difficulty contacting the liquidators.  One of them had died.  Despite the remaining liquidator being aware of the claim, the applicants’ solicitors were unable to discover the reason or reasons why they were not informed of the respondent being wound up.

5. On 4 February 2013, the respondent’s solicitors provided the applicants’ solicitors with a copy of an insurance policy.  Those solicitors also confirmed that they continued to act for the respondent and its insurers in these proceedings.  What remains in doubt is the extent to which the policy provides (or limits) recovery by the applicants for the claims they make in the proceeding.  Significantly, the application is neither consented to nor opposed by the respondent.

6. The principles relevant to an application for leave under s 500(2) are well established: see Altinova Nominees Pty Ltd v Leveraged Capital Pty Ltd (Receivers and Managers Appointed) (in liquidation) (No 2) [2009] FCA 42 at [17]-[23]; Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liquidation) [2010] FCA 597 at [16] and Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356 at [18]-[24].

7. As Foster J said in Eopply:

   22In Executive Director of the Department of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484, Lee J discussed the relevant considerations which should ordinarily guide the exercise of the discretion to grant leave to proceed against a corporation in liquidation. The following considerations may be extracted from his Honour’s judgment:

   (a)The purpose of having a requirement for leave is to prevent a corporation in liquidation being subjected to actions that are expensive and, therefore, carried on at the expense of the creditors of the company and, perhaps, unnecessarily.

   (b)In determining whether leave should be granted, the Court considers whether the balance of convenience lies in allowing the applicant to proceed by way of action to judgment, or whether the applicant should be left to pursue his or her claim by lodging a proof of debt with the liquidator. The matter is one of discretion and the onus is on the applicant to demonstrate why it is more appropriate in respect of the particular claim, to proceed by way of action.

   (c)For leave to be granted, it must be shown that there is a serious or substantial question to be tried and a real dispute between the parties. Leave will not be granted where the applicant does not have a genuine claim or where the claim would be futile.

8. Here, the considerations that point to the grant of leave are:

   1.the claim raises a substantial question to be tried and there is a real dispute between the parties;

   2.although the liquidator informed the applicants’ solicitors that the respondent has no assets and therefore the claim is said to be futile, the claim is in fact against an insurer and being defended by the insurer; and

   3.there is no opposition to leave being granted.

9. There is no consideration of any significance which would tend against the grant of leave.  However, the one issue which remains is that noted earlier – the extent to which the policy provides (or limits) recovery by the applicants for the claims they make in this proceeding.  As the affidavit filed by the applicants’ solicitor stated, he had not been given any information about the extent the policy limited recovery by his clients.  For example, claims may have exhausted already the extent of the policy.

10. For these reasons, I would grant leave to the applicants to proceed against the respondent in respect of the claims which it has made in this proceeding pursuant to s 500(2) of the Act. However, the grant of leave would be on terms: s 500(2). The initial grant of leave is limited to preparation for, and attendance at, a mediation before a Registrar of the Court by no later than 31 July 2013. Secondly, the application for leave under s 500(2) will be adjourned to 9 August 2013. That will provide the applicants’ solicitors with an opportunity to renew the application for leave if that becomes necessary.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:

Dated:       31 May 2013