Caruso v Built It Pty Ltd (in liq)

[2018] SASC 71

SUPREME COURT OF SOUTH AUSTRALIA

(Applications Under Various Acts or Rules: Civil)

CARUSO v BUILT IT PTY LTD (IN LIQUIDATION)

[2018] SASC 71

Judgment of The Honourable Justice Doyle

1 June 2018

APPEAL AND NEW TRIAL - NEW TRIAL - IN GENERAL AND PARTICULAR GROUNDS - PARTICULAR GROUNDS - FRESH EVIDENCE - OTHER MATTERS - EVIDENCE OF FRAUD OR DECEPTION

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - POINTS AND OBJECTIONS NOT TAKEN BELOW - WHEN ALLOWED TO BE RAISED ON APPEAL - OTHER MATTERS

APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA

Application for leave under s 471B of the Corporations Act 2001 (Cth) to bring an application against a company in liquidation. The proposed application is one in the Magistrates Court to set aside a judgment obtained by the company on the basis that it was obtained by fraud.

Consideration of factors relevant to exercise of discretion to grant leave to proceed.  Consideration of whether there is a solid foundation for the proposed application.

Held (per Doyle J), dismissing the application:

1.      There are some considerations favouring a grant of leave, namely that the proceedings are well progressed, the proposed application is essentially defensive in character and a proof of debt is not an available alternative.

2.      However, the proposed application, which requires proof of fraud, does not have a solid foundation in fact or law.

3. The application for leave to proceed under s 471B should be dismissed.

Corporations Act 2001 Cth s 471B; Magistrates Court (Civil) Rules 2013 (SA) r 104; Building Work Contractors Act 1995 (SA) s 12, s 6, s 9, referred to.
Clone Pty Ltd v Players Pty Ltd (In liq) (Receivers and Managers Appointed) 92 ALJR 399, applied.
Ong & Ors v Lottwo Pty Ltd (In liq) [2013] SASCFC 57; Commonwealth v Davis Samuel Pty Ltd (2008) 164 ACTR 1; Clone Pty Ltd v Players Pty Ltd (2018) 92 ALJR 399, discussed.
Bratovic v SBM Argentinian Bar and Grill Pty Ltd & Ors [2005] SASC 431, considered.

CARUSO v BUILT IT PTY LTD (IN LIQUIDATION)
[2018] SASC 71

Civil.

DOYLE J:

1. This is an application by Mr Caruso under s 471B of the Corporations Act 2001 (Cth) for leave to bring an application against Built It Pty Ltd (in liq) under r 104 of the Magistrates Court (Civil) Rules 2013 (SA).

2. By way of overview, in September 2017 Built It obtained a judgment in the Magistrates Court against Mr Caruso for the sum of $33,938.50 plus interest and costs for some building work it undertook between about May 2013 and March 2014. Mr Caruso commenced an appeal against that judgment in this Court. However, on 22 November 2017, and before the appeal was heard, an order was made winding up Built It. The appeal was automatically stayed by reason of the operation of s 471B, and Mr Caruso has not made any application for leave to proceed with that appeal.

3. Built It has indicated an intention to pursue the quantification of its entitlement to costs and interest under its Magistrates Court judgment against Mr Caruso, and to pursue enforcement of the judgment sum (together with the sum it is entitled to by way of costs and interest) against Mr Caruso.

4. In response to this stated intention, Mr Caruso now seeks to set aside the judgment under r 104 of the Magistrates Court Rules on the ground that it was obtained through fraud or an irregularity. He relies upon information he has obtained that he says establishes that, by reason of an undertaking given by Mr Zollo to the District Court, and Mr Zollo’s involvement in the building work on behalf of Built In in contravention of that undertaking, the building work to which the judgment sum relates was unauthorised. Mr Caruso contends that by reason of s 6(2) of the Building Work Contractors Act 1995 (SA), Built It was therefore not entitled to be paid for that work. He further contends that the undertaking (or at least its relevance in terms of timing to the building work done for him), and hence unauthorised nature of the work, was concealed from him and the Magistrates Court.

   The Court’s discretion to grant leave under s 471B

5. Section 471B contains a general prohibition upon court action against a company after a winding up order has been made in relation to that company. This is subject to the Court exercising its discretion to grant leave under that section.

6. The rationale for the general prohibition is to ensure that the liquidation proceeds in an orderly manner, and in accordance with the ordinary rules governing that process.[1] The general prohibition in s 471B operates to restrict a creditor’s ability to take steps outside the ordinary proof of debt process that might lead to preferential treatment of a particular creditor, or that might otherwise result in an undesirable diversion of the liquidator’s funds, time and attention in addressing expensive and time-consuming litigation.[2]

   [1]    Ong v Lottwo Pty Ltd [2013] SASCFC 57 at [60].

   [2]    Commonwealth v David Samuel Pty Ltd (2008) 164 ACTR 1 at [10]-[15], which emphasises this last matter over the concern to avoid preferential treatment.

7. The exercise of the Court’s discretion to grant leave to proceed under s 471B is, of course, to be informed and guided by this underlying rationale for the existence of s 471B. There are numerous authorities that have considered the various matters that will be relevant in determining whether leave ought to be granted. It is not necessary for me to list or summarise these considerations. It is sufficient for me to refer to, and adopt, the summaries in Ong v Lottwo Pty Ltd,[3] and Commonwealth v Davis Samuel Pty Ltd.[4]

   [3]    Ong v Lottwo Pty Ltd [2013] SASCFC 57 at [60]-[61].

   [4]    Commonwealth v Davis Samuel Pty Ltd (2008) 164 ACTR 1 at [19]-[36].

8. In the present case there are some matters that weigh in favour of a grant of leave.

9. The first of these is that the litigation between the parties has already been on foot for a number of years prior to Built It being placed into liquidation.  The proceedings were well progressed, and indeed the trial had been heard and judgment delivered.[5]

   [5]    Commonwealth v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 1 at [30].

10. The second of these is that the application sought to be pursued by Mr Caruso has an essentially defensive character to it in that he is pursuing the application by way of answer to Built It’s continued intention to enforce its judgment against him. I say “essentially” defensive character because while the contemplated application is by way of answer to Built It’s claim, it is to be made by way of an application that is an attack upon a perfected judgment in Built It’s favour rather than a defence or answer pursued in the ordinary course of proceedings. Some authorities have gone as far as to hold that defensive applications within proceedings brought by the company in liquidation do not require leave under s 471B.[6]  Counsel for Mr Caruso did not go that far here; however, analogous considerations apply and suggest that leave may be more readily granted where the proceeding or application sought to be pursued has a defensive character.

    [6]    For example, BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857 at 859; Dealquip Australia Pty Ltd v 33 Electra Pty Ltd No 2) [2013] NSWSC 1382 at [20]-[21].

11. Thirdly, the proposed application is not a matter that would be susceptible of being pursued by Mr Caruso through the proof of debt procedure, or indeed any other avenue, if leave to proceed were refused.[7] 

    [7]    Commonwealth v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 1 at [36].

12. Essentially, Mr Caruso’s position is that if the company in liquidation wishes to pursue its entitlement against him, which it apparently does, then it is only fair and appropriate that he be entitled to raise and pursue any answer properly open to him.

13. There is some merit and force in these matters.  On the other hand, it remains relevant that the application that Mr Caruso wishes to pursue will require significant time, work and expense by the liquidator, and hence result in a significant diversion of the time, attention and funds otherwise available to the liquidation and the creditors more generally.  It is not possible for me to be at all precise about the extent of the time and work likely to be involved in addressing the contemplated application.  In part this is a product of the rather nebulous form in which it was articulated before me.  However, it is plain that the application will involve determination of some disputed matters of fact and law about the role of Mr Zollo in the building work undertaken for Mr Caruso, and the operation of the relevant provisions of the Building Work Contractors Act.  It is likely that there would need to be evidence from, and cross-examination of, at least Mr Caruso, Mr Zollo and Mr MacDonald, although the scope of such evidence and cross-examination is presently unclear.  I expect the application will involve at least a few days of court time, and all of the preparatory time and work that would ordinarily be associated with a hearing of this nature and length.

14. It is on account of this anticipated time, work and expense that even in a case, such as the present, where there are some sound reasons for contemplating a grant of leave, the Court will nevertheless require satisfaction that the proposed proceeding or application has a solid foundation and gives rise to a serious dispute.[8] This does not require a determination of the merits, but it requires some consideration of the merits. That consideration may be relatively rudimentary given the nature and timing of the application for leave to proceed under s 471B, and the information likely to be available to the Court on such an application. But unless the Court is satisfied that the proposed proceeding or application has a solid foundation in fact and law it would not be consistent with the rationale for s 471B to grant leave. It would not be consistent with that rationale to grant leave in respect of a proceeding or application that has hopeless, very limited or simply entirely unknown prospects of success.

    [8]    Vagrand Pty Ltd v Fielding (1993) 41 FCR 550 at 556; Commonwealth v Davis Samuel Pty Ltd (No 5) (2008) 164 ACTR 1 at [21]-[29]; Ong v Lottwo Pty Ltd [2013] SASCFC 57 at [61].

15. Before turning to undertake a consideration of the merits of Mr Caruso’s proposed application, I observe that in opposing this application Built It emphasised the importance of finality in litigation. Here the application for leave to proceed comes at what would otherwise have been the very end of long and hard fought litigation, and in respect of which the time taken, and expense incurred, are already well out of proportion to the issues and dollars at stake. I accept that the public interest in the finality of litigation is a significant matter. However, I consider it is more relevant in the present case to the nature of the Magistrates Court’s powers under r 104, and hence to Mr Caruso’s prospects of success in his proposed application under that rule. Indeed, it was in the analogous context of an attempt to invoke the Court’s equitable jurisdiction to set aside a judgment for fraud that the High Court in Clone Pty Ltd v Players Pty Ltd[9] has most recently emphasised the importance of the finality of litigation.  I shall thus return to the significance of this matter later in these reasons.

    [9][9] Clone Pty Ltd v Players Pty Ltd (2018) 92 ALJR 399 at [69]-[70].

    The proposed application under r 104

16. Rule 104 of the Magistrate Court Rules provides the Court with power to set aside a perfected judgment in defined circumstances.  It provides:

    (1)     The Court may vary or set aside a judgment –

    (a)     …

    (b)     after it is entered 

    (i)      if the judgment was obtained by fraud;

    (ii)     if the judgment does not reflect the intention of the Court;

    (iii)    if the parties consent; or

    (iv)    if it was obtained consequent upon any irregularity.

17. Here Mr Caruso relies upon the power under r 104(1)(b)(i) in relation to a judgment obtained by fraud. While counsel for Mr Caruso on occasions flirted with reliance upon an “irregularity” under r 104(1)(b)(iv), this submission was not pressed other than faintly, and was not developed. I do not consider that the matters raised by Mr Caruso provide any foundation for reliance upon an irregularity in the sense contemplated by this sub-paragraph of r 104.

18. The power under r 104(1)(b)(i) is a rules-based manifestation of the courts’ equitable jurisdiction to set aside perfected judgments on account of fraud. As the High Court explained in Clone Pty Ltd v Players Pty Ltd,[10] the power to set aside a perfected judgment on the grounds of fraud requires “actual fraud”.  It has not been diluted to allow, for instance, the judgment to be set aside for misconduct, accident, surprise or mistake.  Equitable fraud, constructive fraud or a “lack of frankness” will not suffice.  There must be some intentional contrivance to keep the other party and the Court in ignorance of the real facts of the case with a view to obtaining a favourable judgment, and not merely acts which might deceive or mislead without any such intention or contrivance. 

    [10] Clone Pty Ltd v Players Pty Ltd (2018) 92 ALJR 399 at [55], [57].

19. In Clone Pty Ltd v Players Pty Ltd the appellant was found to have engaged in “serious malpractice” through its lawyers in not disclosing a relevant document and in misleading the Court.  However, as the respondent had not pleaded or proved actual fraud, the Court’s power to set aside the perfected judgment had not been enlivened.  In taking a narrow view of the power, the High Court emphasised the importance of finality in litigation, and the consequential need for a strict approach to finality.[11]  The Court also emphasised the need to ensure that any allegation of actual fraud relied upon in this context is clearly pleaded and proved.[12]

    [11] Clone Pty Ltd v Players Pty Ltd (2018) 92 ALJR 399 at [69]-[70].

    [12] Clone Pty Ltd v Players Pty Ltd (2018) 92 ALJR 399 at [62].

20. I am satisfied that r 104(1)(b)(i) should be interpreted in conformity with this approach. The reference to fraud in this sub-paragraph of the rule should be understood as “actual fraud” in the sense described by the High Court. Whether the manifestation of the equivalent power in r 242 of the Supreme Court (Civil) Rules 2006 (SA) – which is expressed in general terms without any reference to fraud – is similarly confined is not a matter I need to address.

21. The complaint underpinning Mr Caruso’s allegation of fraud against Built It relates to matters learnt by him after judgment had been entered in the Magistrates Court and in relation to an undertaking given by Mr Zollo to the District Court in March 2000.  The undertaking was in terms that he would not act as the director of a body corporate that is a building contractor.  It is claimed by Mr Caruso that Mr Zollo breached this undertaking in relation to the building work he did for Mr Caruso by being a formally appointed director (according to ASIC records) during some of the period that that work was ongoing, and being a de facto director during the balance of that period.

22. It appears that Mr Caruso was aware by the time of the Magistrates Court trial of the fact of an undertaking by Mr Zollo to this effect, and some issues more generally in relation to Mr Zollo’s compliance with his obligations as a builder.  Indeed, the latter were expressly mentioned by the Magistrate in his reasons for judgment.  However, Mr Caruso claims not to have become aware of the full significance of these matters, and in particular that the undertaking pre-dated the work Mr Zollo did for Mr Caruso, until after the conclusion of the trial when he learnt the detail of the complaint issued by the Commissioner for Consumer Affairs against Mr Zollo in the District Court.

23. The District Court proceedings are against both Built It and Mr Zollo. They do not contain any allegations in relation to the building work undertaken for Mr Caruso, however they contain allegations of various types of misconduct by Built It and Mr Zollo (including breaches of the undertaking) in relation to building work done for others during a similar period of time. The District Court proceedings were issued back in 2015, but have not reached finality. Indeed, they are now stayed as against Built It by reason of it going into liquidation, and I am told that the Commissioner for Consumer Affairs has given an indication to the District Court that the complaint against Built It will not be the subject of any application for leave to proceed. The District Court proceedings remain on foot as against Mr Zollo, although Mr Zollo contends that they are now bound to fail by reason of s 21(4) of the Building Work Contractors Act and the liquidation of Built It. In any event, I do not regard these proceedings as being of any particular significance in their own right; they are relevant only as having alerted Mr Caruso to the matters he now relies upon in support of his proposed application under r 104, and in particular Mr Zollo’s March 2000 undertaking not to act as the director of a body corporate that is a building contractor.

24. Mr Caruso contends that had he known of the undertaking, he would have had a defence, or answer, to Built It’s claim. He relies in this respect upon s 6 of the Building Work Contractors Act. Section 6(1)(a) provides that a person must not carry on business as a building work contractor except as authorised by a licence. Section 6(2) operates to prevent a builder from recovering a fee for work that is was not authorised to perform under a licence. It provides:

    (2)A person required by this Act to be licensed as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless—

    (a)     the person was authorised to perform the work under a licence; or

    (b)     a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person's failure to be so authorised resulted from inadvertence only.

25. Here, Built It did have a licence throughout the period of the relevant building work. However, Mr Caruso challenges the entitlement of Built It to that licence, and the suggestion that the building work for Mr Caruso was “authorised by a licence”. Mr Caruso relies in this respect upon both s 9(2) and s 12(1) of the Building Work Contractors Act.

26. Section 9(2) provides that a body corporate is entitled to be granted a licence if, amongst other things, no director is suspended or disqualified from carrying on an occupation, trade or business under a State or Commonwealth law (s 9(2)(b)(i)), and each director is a fit and proper person to be the director of a body corporate that is the holder of a licence (s 9(2)(e)).

27. Section 12(1) of the Building Work Contractors Act, provides that a licensed building work contractor must ensure that it has an approved registered building work supervisor at all times during the currency of its licence (s 12(1)(a)), and that all building work performed under the authority of the licence is properly supervised by an approved registered building work supervisor (s 12(1)(b)). Section 12(3) provides for the suspension of the licence in the event of non-compliance with s 12(1) for a period exceeding 28 days.

28. It appears that Mr Zollo was registered with ASIC as a director of Built It during a period of the time the building work for Mr Caruso was being undertaken.  In addition to this, Mr Caruso contends that at all times throughout this building work, Mr Zollo was acting as the principal for Build It; that he was the ‘real’ supervisor of the building work and de facto director of Built It.  He contends that insofar as Mr MacDonald was, and is, said by Built It to have been the supervisor that this is not reflected in the time sheets for the project.  The time sheets show most of the work being done by Mr Zollo, and only modest and occasional work by Mr MacDonald.  Indeed, there was at least one period of a couple of months where Mr MacDonald’s time sheets do not show him doing any work on the project.  Mr Caruso also contends that the limited fees charged by Mr MacDonald for his work on this project support the contention that the ‘real’ supervisor was Mr Zollo and not Mr MacDonald.  Indeed Mr Caruso went as far as to suggest that some of Mr MacDonald’s time sheets were fabricated or “bogus”, pointing to the fact that they referred to work by Mr MacDonald on dates that were after the substantive building work had stopped and after Mr MacDonald last charged Built It for the work he did.

1. When pressed as to precisely what the allegation of fraud made against Built It was, Mr Caruso’s counsel said that it was Built It’s conduct in failing to disclose the fact and timing of Mr Zollo’s undertaking, which (on Mr Caruso’s case) would have entitled Mr Caruso to a defence under s 6(2) of the Building Work Contractors Act.

2. Built It contends that there is no merit in, or no solid foundation for, Mr Caruso’s proposed application under r 104. It relies upon the following matters.

3. First, Built It complains that the allegation(s) of fraud has not been clearly articulated in the sense required by Clone Pty Ltd v Players Pty Ltd.  While the allegations made were initially somewhat nebulous, they were refined during the course of argument and have been summarised above. Bearing in mind that the application under r 104 has not yet itself been issued, I would not refuse leave on this ground.

4. Secondly, Built It complains that Mr Caruso knew of the undertaking, and other issues in relation to Mr Zollo’s historical compliance with his obligations as a builder, during the course of the trial.  Indeed, some of the matters were referred to in the documents disclosed, and raised during the cross-examination of Mr Zollo.  Built It contends that in these circumstances, Mr Caruso knew (or ought to have known) of the matters now relied upon, or at the very least Mr Zollo cannot be said to have fraudulently concealed them from Mr Caruso.

5. I am prepared to accept that while Mr Caruso knew at all relevant times that Mr Zollo had given an undertaking, and had encountered other disciplinary issues in the past, he did not realise that the undertaking covered the period of the building work undertaken for him. However, it is quite another thing to suggest that the timing of the undertaking was fraudulently concealed from Mr Caruso by Built It. While the detail of the undertaking was not volunteered by Built It, it was entitled to take the view that it was not a matter raised in the pleadings and (for the reasons set out below) not otherwise of obvious relevance to Built It’s entitlement to be paid. The fact of the undertaking, even if breached, did not necessarily or automatically disentitle Built It to payment under s 6(2) of the Building Work Contractors Act. It follows that while Mr Zollo (and through him, Built It) might legitimately be criticised for a lack of frankness, I am not satisfied that Mr Caruso has established a solid foundation for his contention that this involved fraud in the relevant sense; that is, actual fraud in the nature of an intentional contrivance to keep Mr Caruso and the Court in ignorance of the real facts.

6. I turn now to Built It’s contention that even if the undertaking had been (fraudulently) concealed from Mr Caruso, Mr Caruso’s contention that the undertaking would have disentitled Built It to payment by reason of s 6(2) of the Building Work Contractors Act was in any event misconceived. 

7. Built It’s primary contention in this respect is that s 6(2) would only have operated to disentitle Built It from payment if it were not licenced for the relevant work, whereas in fact it was licenced. Built It further contends that even if Mr Zollo had been a director (which was not conceded), this may have operated to prevent Built It being entitled to be granted a licence under s 9(2) but did not, and could not, alter the fact that it did in fact have a licence at the relevant time.

8. Similarly, so far as s 12(1) was concerned, Built It relied upon the fact that Mr MacDonald was an approved registered building work supervisor in respect of the relevant building work. While Mr Caruso now wishes to contend that Mr MacDonald did not “properly” supervisor that work under s 12(1)(b), Built It contends that this is a matter that Mr Caruso could have and should have pursued at trial. There was no concealment of anything in relation to Mr MacDonald’s involvement, or lack of involvement. While there is now an allegation that some of his time sheets might be “bogus”, this is an allegation that could have been made at the time, and is in any event speculative and does not have any solid foundation.

9. In summary, Built It contends that there are factual difficulties with Mr Caruso’s allegations in relation to s 9(2) and s 12(1), and that there is an overarching legal difficulty that even if contraventions of one or both of these provisions could be made out, they do not trigger a disentitlement to be paid under s 6(2).

10. I accept these submissions of Built It, and am thus satisfied that there are significant factual and legal obstacles to Mr Caruso’s contention that knowledge of the undertaking would have provided him with a defence to Built It’s claim for payment for the building work it performed for Mr Caruso.

11. In summary, by reason of the combination of the difficulties identified in Mr Caruso establishing that the undertaking disentitled Built It from payment and that it was fraudulently concealed from him, I am not satisfied that Mr Caruso has established a solid foundation for his proposed application under r 104 of the Magistrates Court Rules.  I am thus not satisfied that it would be appropriate to exercise my discretion to grant him leave to commence that application under s 471B of the Corporations Act 2003 (SA).

    A procedural issue

12. A procedural issue emerged during the course of oral argument in this matter.  It arises from a decision of Master Lunn in Bratovic v SBM Argentinian Bar and Grill Pty Ltd,[13] and was mentioned by Nicholson J in Ong v Lottwo Pty Ltd.[14] The issue is whether an application for leave to proceed under s 471B, being an application under the Corporations Act, must be brought in proceedings instituted under the Corporations Rules.

    [13] Bratovic v SBM Argentinian Bar and Grill Pty Ltd [2005] SASC 431.

    [14] Ong v Lottwo Pty Ltd [2013] SASCFC 57 at [64]. Kourakis CJ and Stanley J agreed with the reasons of Nicholson J.

13. According to Master Lunn in Bratovic v SBM Argentinian Bar and Grill Pty Ltd,[15] that is the effect of the combination of r 1.3 and r 2.2 of the Corporations Rules.  Further, his Honour held that a failure to comply with this requirement could not be saved by s 467A of the Corporations Act because there was no application on which that section could operate, and likewise could not be saved by s 1322(2) of that Act because there was no proceeding under that Act to which that section could apply.[16]

    [15] Bratovic v SBM Argentinian Bar and Grill Pty Ltd [2005] SASC 431 at [8]-[20].

    [16] Bratovic v SBM Argentinian Bar and Grill Pty Ltd [2005] SASC 431 at [20].

14. In Ong v Lottwo Pty Ltd, Nicholson J adverted to the same issue, observing that he inclined to the view that it was correct that the application ought to have been brought in proceedings instituted under the Corporations Rules.  His Honour also queried whether the objection was one that could be, or should be, waived.[17] However, his Honour did not consider it necessary in the circumstances of that case to express a final view about these matters.

    [17] Ong v Lottwo Pty Ltd [2013] SASCFC 57 [64].

15. In this case, Built It expressly waived any objection to Mr Caruso’s application on the ground of non-compliance with the Corporations Rules.  It did so on the pragmatic ground that there would be nothing to prevent Mr Caruso now issuing an originating process and seeking the same order in those fresh proceedings. Given that the parties had already prepared for, and partly completed, the hearing of the application when the issue arose, reliance upon this procedural objection would serve only to increase the delay and expense in these proceedings, which already have an unfortunate history in that regard.

16. As both Master Lunn and Nicholson J observed, there are often good reasons why applications under the Corporations Act should be brought in separate proceedings issued under the Corporations Rules, and hence often good reasons not to waive any procedural irregularity in that regard.  However, I am not satisfied that there is not power to do so in an appropriate case.

17. The Corporations Act does not itself impose any procedural requirement in relation to the making of an application under s 471B that has not been complied with in this case. It is thus not clear to me why Mr Caruso’s application cannot be described as an application under the Corporations Act for the purposes of s 467A, or indeed a proceeding under that Act for the purposes of s 1322.  The present situation is readily distinguishable from the cases which have held that a failure to comply with a requirement for an application under the Corporations Act itself (for example, the time for bringing an application to set aside a statutory demand under s 459G) has the consequence that there is no application or proceeding upon which s 467A or s 1322 can operate.

18. To the extent that the Corporations Rules have not been complied with, courts are ordinarily entitled to dispense with compliance with the rules in an appropriate case.  Here, r 1.3 of the Corporations Rules is expressed to apply “[u]nless the Court otherwise orders”.  Master Lunn was not prepared to make such an order in Bratovic v SBM Argentinian Bar and Grill Pty Ltd[18] given the circumstances in which the issue had arisen in that case.  However, in so holding, his Honour appears to have implicitly accepted that there was power to make such an order in an appropriate case.

    [18] Bratovic v SBM Argentinian Bar and Grill Pty Ltd [2005] SASC 431 at [21].

19. In my view, given the absence of any objection by Built It, the absence of any prejudice to Built It or to the orderly hearing and determination of the application by the Court, the fact that the application has been brought in proceedings where the entities with an interest in the application are all parties in those proceedings and indeed the only parties in those proceedings, the absence of any practical utility in requiring that Mr Caruso issue fresh proceedings, and the inevitability that issuing fresh proceedings will serve only to occasion additional expense and delay in proceedings with a history of the same, I would be inclined to dispense with any requirement in the Corporations Rules that the application be made in fresh proceedings commenced under those rules. 

20. All of that said, I do not consider it necessary or desirable that I express a final view as to the existence of a procedural obstacle, or my ability to dispense with compliance with the Corporations Rules.  It is not necessary to do so because I have reached the view that the application should be dismissed on its merits.  And it is not desirable to do so because I have not heard full submissions on these issues.

    Conclusion

21. For the reasons set out I dismiss Mr Caruso’s application for leave to proceed under s 471B of the Corporations Act.