BGC Construction v Genovese

In the Federal Court of Australia, BGC Construction Pty Ltd lodged a creditors petition against Genovese, seeking to wind up a company in which it was a creditor. Genovese opposed the petition and raised several grounds for opposition, including that the petition was an abuse of process. BGC Construction subsequently sought to have ground 4 of the Notice Stating Grounds of Opposition dismissed, on the basis that it was frivolous and vexatious. The court was required to determine whether ground 4 was frivolous and vexatious, and therefore dismissible, or whether it was a legitimate ground for opposing the petition.

The court found that the term "frivolous and vexatious" was not defined in the Corporations Act and therefore looked to the common law for guidance. It held that a proceeding is frivolous or vexatious where it has no reasonable prospect of success, or where it is brought for an improper purpose, such as to harass or delay the opposing party. The court considered that ground 4 had some prospect of success, as it was possible that the petition was brought for an improper purpose. However, the court found that the evidence did not support this contention and that the petition was brought for a proper purpose. Accordingly, the court dismissed ground 4 of the Notice and ordered Genovese to pay the costs of the proceedings in relation to that ground.