Bol v Coolgardie Minerals Ltd (Receiver and Manager Appointed) (in Liq)

[2021] WASC 255

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   BOL -v- COOLGARDIE MINERALS LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ) [2021] WASC 255

CORAM:   ACTING MASTER STRK

HEARD:   11 JUNE 2021

DELIVERED          :   11 JUNE 2021

PUBLISHED           :   27 JULY 2021

FILE NO/S:   COR 99 of 2021

BETWEEN:   CHAGUOR BOL

Plaintiff

AND

COOLGARDIE MINERALS LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ)

Defendant

Catchwords:

Corporations - Application for leave to commence and proceed with an action against a company being wound up - Application for leave to commence an action sought nunc pro tunc - Liquidators unfunded - Whether leave should be granted - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 500(2)

Result:

Application granted

Category:    B

Representation:

Counsel:

Plaintiff	:	V E Long-Droppert
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Leon Martin Barristers & Solicitors
Defendant	:	No appearance

Case(s) referred to in decision(s):

Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334

Emanuele v Australian Securities Commission (1997) 188 CLR 114

Home Corp Projects (No 100) v Australian Home Mortgage Corporation [2001] NSWLR 701

Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408

Re Sydney Formworks Pty Ltd (In Liq) [1965] NSWR 646

ACTING MASTER STRK:

(This decision was delivered extemporaneously on 11 June 2021 and has been edited from the transcript.)

1. This is an application made pursuant to the Corporations Act 2001 (Cth) s 500(2) by the plaintiff.[1] The plaintiff seeks to be granted leave nunc pro tunc to commence and proceed with District Court action CIV 1421 of 2021 in the District Court of Western Australia against the defendant.  For the reasons that follow, it is appropriate that leave be granted.

   [1] By the originating summons, in the alternative to the Corporations Act s 500(2), the application was made pursuant to s 471B. The application in the alternative was not pressed at the hearing.

The application and factual background

1. The application was made by an originating process filed on 4 June 2021. The application is supported by an affidavit of Leon Andrew Martin, solicitor for the plaintiff, sworn on 4 June 2021.

2. Bryan Kevin Hughes and Daniel Johannes Bredencamp were appointed as liquidators to the defendant on 27 May 2020, and the defendant continues to be a registered company externally administered. While the defendant in this proceeding is described as Coolgardie Minerals Limited (receiver and manager appointed) (in liquidation), the receivers and managers retired on 28 April 2021.  It is appropriate that the name of the defendant in this proceeding be amended to reflect the same.

3. Mr Martin, among other things, deposes to the following.

4. The plaintiff was employed by Sstar HR International Pty Ltd, a  labour hire firm, as a geology assistant.  The defendant conducted mining activities at the defendant's Geko minesite, located approximately 24 km North West of Coolgardie.  As the employee of Sstar HR International Pty Ltd, the plaintiff provided services to the defendant.  Mr Martin deposes that on or about 1 August 2018, the plaintiff suffered injuries in an accident which occurred at the defendant's Geko minesite.

5. Mr Martin deposes to his belief that at all material times the defendant had in place a public liability insurance policy issued by Dual Australia Pty Limited.  Mr Martin says that he was provided with a copy of a policy of public liability insurance issued by Dual Australia by an email communication received on 10 May 2021.  Annexed to Mr Martin's affidavit is a document titled 'Resource Industry Public & Products Liability Insurance Schedule' issued by Dual Australia in favour of Coolgardie Minerals Limited, which notes a period of insurance from 31 October 2017 to 31 March 2019.

6. Mr Martin deposes to his belief that the plaintiff's action against  the defendant for damages in relation to personal injury allegedly suffered on 1 August 2018 must be commenced on or before 31 July 2021.

7. On 29 April 2021 a writ of summons was presented for filing in the District Court and sealed. Chaguor Bol was named as the plaintiff in District Court action CIV 1421 of 2021 and Coolgardie Minerals Limited was named as the defendant.  The defendant was named in the writ in a manner that did not include reference to the company being in external administration.  Mr Martin deposes that through an oversight on his part, no order was obtained granting leave to the plaintiff to commence the District Court action pursuant to the Corporations Act s 500(2) prior to the commencement of the District Court action. On the affidavit evidence before me, it can be discerned that the defendant company was in liquidation when the District Court action was commenced.

8. By letter dated 4 May 2021, Mr Martin was advised by the liquidators that, among other things, the liquidation of the defendant company was unfunded and that the liquidators did not intend to file an appearance in the District Court action.

9. While the affidavit evidence reveals that Dual Australia is now on notice of the plaintiff's claim, I understand that the company's defence is not presently being conducted by the insurer.  About the time that this application was filed, Dual Australia was seeking further information in relation to the claim from Mr Martin.

10. Mr Martin also deposes that on 8 October 2019, liability was accepted by QBE Insurance on behalf of Sstar HR International Pty Ltd  under the Workers' Compensation and Injury Management Act 1981 (WA). Mr Martin further deposes that the plaintiff now intends to seek common law damages against the defendant by prosecuting the District Court action.

11. Mr Martin gave notice to the liquidators of the defendant company of the intention to make this application on behalf of the plaintiff. Properly, the liquidators noted the requirement for leave under the Corporations Act s 500(2) and informed Mr Martin that they could not consent to the commencement or progress of the District Court action.

Whether leave can be granted nunc pro tunc

1. At the hearing of the application, counsel for the plaintiff addressed whether leave may be given under s 500(2) nunc pro tunc, where a proceeding has been commenced against a company after the passing of a resolution for voluntary winding up of the company. Counsel referred to the decisions of Palmer J in Home Corp Projects (No 100) v Australian Home Mortgage Corporation [2001] NSWLR 701, and McLelland CJ in Re  Sydney Formworks Pty Ltd (In Liq) [1965] NSWR 646, in support of the submission that the court has jurisdiction to grant leave 'now for then' under s 500(2).

2. The decision of Palmer J in Home Corp Projects (No 100) v Australian Home Mortgage Corporation concerned an application to set aside a statutory demand made by a plaintiff against a defendant that was in liquidation pursuant to a resolution for voluntary winding up.

3. Having considered the authorities referred to and relied upon by counsel for the plaintiff, I accept counsel's submission that the failure by the plaintiff to apply for leave prior to the commencement of the District Court proceeding was an irregularity which could be cured by granting leave nunc pro tunc.  The failure to obtain leave was procedural and did not go to jurisdiction.[2]

   [2] See Emanuele v Australian Securities Commission (1997) 188 CLR 114.

Whether leave should be granted

The applicable principles

1. In Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [6] - [14], Beech J outlined the principles relevant to an application under s 500(2) for leave to proceed against a company in liquidation in the following terms.[3]

   [3] The outline draws on the principles summarised by Beech J in Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334 [4] - [15].

   6Section 500(2) of the Corporations Act provides that after the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court imposes.

   7Like provision in respect of companies being wound up in insolvency or by the court is made in s 471B.  The same principles govern the grant of leave under these sections.

   8Part of the purpose of the requirement of leave is to avoid a company in liquidation being subject to a multiplicity of time consuming and expensive actions:  Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314, 315 - 317; Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550, 555; Viscariello v Bernsteen Pty Ltd (in liq) [2004] SASC 266 [21].

   9The discretion to grant or refuse leave is broad. It is not possible or appropriate to attempt to state exhaustively the relevant considerations.  Among the relevant considerations are the amount, seriousness and nature of the claim; the degree of complexity and legal factual issues, and the stage the proceedings have reached:  Re Gordon Grant (317); Viscariello [21]; Lawless v Mackendrick [No 2] [2008] WASC 15 [35]; Duke v Rain Bow Pty Ltd [2011] VSC 599 [19].

   10It has often been said that there must be no prejudice to the creditors, or to the orderly winding up of the company, before the action is allowed to proceed:  Re Gordon Grant and Grant Pty Ltd (in liq) (1982) 6 ACLR 727, 730; Re Sydney Formworks Pty Ltd (in liq) [1965] NSWR 646, 649 - 650; Re AJ Benjamin Ltd (in liq) [1969] 2 NSWR 374, 376; Duke v Rain Bow Pty Ltd [20].

   11In Haviland v Joslow (No 4) Pty Ltd [1979] 2 NSWLR 318, 319 Needham J stated that the court should not grant leave to proceed or to commence proceedings against a company in liquidation if it appears there is no possibility that the company will be able to meet any part of damages awarded against it. That was said to be based on the principle that the court should not give its imprimatur to fruitless proceedings which would involve a waste of time and money. That statement of principle has been cited in a number of cases since. See, for example, Maher v Taylor [1984] 1 NSWLR 231, 233; ASIC v Managed Investments Ltd (No 2) [2012] QSC 72 (pages 2 - 3).

   12In Re AJ Benjamin (376), Street J stated that there would be a good reason to refuse leave when there is no prospect of surplus assets in the company and no question of insurance.  That statement was cited with approval in Maher v Taylor (234).

   13The position is different if there is an insurer standing behind the company in liquidation that will pay the amount of any judgment awarded.  That has been said to be a factor strongly favouring the grant of leave, as in those circumstances, the grant of leave will generally not prejudice creditors: Lawless v Mackendrick [No 2] [37]; Re AJ Benjamin; Re Sydney Formworks; Re Coastal Constructions Pty Ltd (1994) 13 ACSR 329.

   14A claimant seeking leave need only to demonstrate a serious question to be tried: Vagrand Pty Ltd v Fielding (556).

2. I adopt and apply the principles outlined by Beech J in the determination of this application.

Disposition

1. Having regard to the affidavit material before me, I am satisfied that the plaintiff has demonstrated that there is a serious question to be tried.  There is evidence of injury.  I have weighed in the balance the nature of the plaintiff's claim and its seriousness.

2. I have carefully weighed in the balance the status of the defendant company, a company in liquidation.  There is some evidence before me that the liquidators are unfunded.  In the circumstances, there would be good reason to refuse leave if there was no prospect of surplus assets in the defendant company and no insurance.  In this case, there is evidence of insurance, and the existence of an insurance policy weighs in favour of leave being granted.

3. On the evidence before me, there appears to be an insurance policy that was in place at the time the alleged incident occurred.  The willingness of the insurer to respond, the breadth of the coverage and whether or not it will ultimately respond are matters which cannot be discerned from the affidavit material.  However, counsel has proffered a form of order that is intended to provide a 'safety net' for the company in liquidation and its creditors broadly.  Order 2 of the plaintiff's minute of amended proposed orders filed on 11 June 2021 contemplates that the plaintiff would not be permitted to enforce any judgment that ultimately might be secured against the defendant without leave of this court.  It is envisaged that upon enforcement, the court may revisit the matter of insurance and whether the insurer will meet any judgment.

4. In all of the circumstances, I am satisfied that there is a serious question to be tried.  The evidence in relation to the insurance tips the balance in favour of leave being granted.  In all of the circumstances and for these reasons, I propose to make orders in terms proffered by the plaintiff and set out in the minute filed on 11 June 2021 with one addition.  The first order should be that the reference to 'Receiver and Manager Appointed' be deleted from the name of the defendant.

Orders

1. Upon hearing counsel as to the form of orders, I propose to make orders in the following terms.

   1.The reference to 'Receiver and Manager Appointed' be deleted from the name of the defendant in this proceeding.

   2.The plaintiff be granted leave nunc pro tunc pursuant to s 500(2) of the Corporations Act 2001 (Cth) to begin and proceed with action CIV 1421 of 2021 in the District Court of Western Australia against the defendant Coolgardie Minerals Limited (In Liquidation).

   3.The plaintiff must not enforce any judgment against the defendant without first obtaining the leave of the Supreme Court of Western Australia.

   4.This application otherwise be adjourned sine die.

   5.The costs of this application be costs in the District Court proceeding.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

EH

Associate to Justice Strk

27 JULY 2021