Cavar v Heckenburg Group Pty Ltd (in liquidation)

[2022] FCA 1333

FEDERAL COURT OF AUSTRALIA

Cavar v Heckenburg Group Pty Ltd (in liquidation) [2022] FCA 1333

Appeal from:	Cavar v Heckenburg Protection Agency [2022] FedCFamC2G 103
File number:	NSD 155 of 2022
Judgment of:	KATZMANN J
Date of judgment:	8 November 2022
Legislation:	Corporations Act 2001 (Cth), ss 58AA, 471B, 496, 500(2)
Cases cited:	Re David Lloyd & Co (1877) 6 Ch D 339
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	15
Date of hearing:	8 November 2022
Counsel for the Applicant:	The Applicant appeared in person
Counsel for the Respondent:	The Respondent did not appear

ORDERS

NSD 155 of 2022

BETWEEN:

CELIA CAVAR

Applicant

AND:

HECKENBURG GROUP PTY LTD ABN 68 624 479 750

Respondent

ORDER MADE BY:	KATZMANN J
DATE OF ORDER:	8 NOVEMBER 2022

THE COURT DECLARES THAT:

1.The proceeding is stayed in accordance with s 471B of the Corporations Act 2001 (Cth).

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

REASONS FOR JUDGMENT

KATZMANN J:

1. On 30 September 2021, Celia Cavar commenced a proceeding in the Federal Circuit and Family Court of Australia (Division2) seeking relief against Heckenburg Group Pty Ltd (which trades as Heckenburg Protection Agency (HPA)) under the Competition and Consumer Act 2010 (Cth) for misleading or deceptive conduct, false and misleading representations, unfair practices, and unconscionable conduct. She also claimed that HPA engaged in “harassment and coercion” and accused HPA of committing an offence under s 225(1) of the National Consumer Credit Protection Act 2009 (Cth). She sought compensation in the amount of $72,000 for lost wages and the harassment and coercion. Evidently, the basis for the proceeding was that she claimed never to have been employed by HPA. Rather, she was employed by Nova Security Group Pty Ltd, which was invoiced for her services by Heckenburg Group. She appears to believe that the particulars of her security licence were unlawfully obtained by HPA and accused its manager of falsifying or duplicating and “abusing” her licence for his private purposes.

2. HPA did not file a notice of address for service and did not appear at a hearing before the primary judge.  On 4 February 2022, Ms Cavar made an oral application for default judgment against HPA.  The primary judge ordered that she file an affidavit of service within seven days and stood the matter over until 18 February 2022.  On 18 February 2022, satisfied that HPA had been served, his Honour heard the application for default judgment after which he reserved judgment.  On 25 February 2022 his Honour dismissed the application, holding that the claims she was making were vexatious and the application was an abuse of process.

3. Ms Cavar now seeks leave to appeal from that judgment.  The application was supported by two affidavits she affirmed on 7 March 2022 and 15 September 2022.  A draft notice of appeal was annexed to the second of the two affidavits.

4. For the following reasons it is not open to the Court to hear or determine the application.

5. As the affidavit Ms Cavar filed in support of her application for leave to appeal discloses, Heckenburg Group has been in external administration since 16 February 2018, that is to say, since before the proceedings in the court below were instituted.  This information appears in an extract from the database of the Australian Securities and Investments Commission, annexed to the affidavit. It was also annexed to the affidavit affirmed by Ms Cavar on 25 September 2021 upon which she relied in the court below.  I can only assume that the annexure escaped the attention of the primary judge.

6. Section 471B of the Corporations Act 2001 (Cth) provides that:

   While a company is being wound up in insolvency or by the Court, or a provisional liquidator is acting, a person cannot begin or proceed with:

   (a)a proceeding in a court against the company or in relation to property of the company; or

   (b)      enforcement process in relation to such property;

   except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

7. Section 500(2) similarly provides that after the passing of a resolution for voluntary winding up, no action or other civil proceeding may proceed or be commenced against the company without the leave of the Court and subject to such terms as the Court imposes.

8. Section 58AA of the Corporations Act defines “court” to mean “any court” and “Court” to mean any of the following courts: the Federal Court; the Supreme Court of a State or Territory; the Federal Circuit and Family Court of Australia (Division 1); or a court to which s 41 of the Family Law Act 1975 (Cth) applies because of a Proclamation made under s 41(2) of that Act.

9. The purpose of provisions like ss 471B and 500(2), which have long been included in companies legislation, is to preserve the limited assets of the company in the best way for distribution among all those persons who have claims on them. As James LJ explained in Re David Lloyd & Co (1877) 6 Ch D 339 at 344, speaking of the relevant companies legislation in Britain at that time, “[t]here being on a small fund or a limited fund to be divided among a great number of persons, it would be monstrous that one or more of them should be harassing the company with actions and incurring costs which would increase the claims against the company and diminish the assets which ought to be divided among all creditors”.

10. No application for leave to proceed against Heckenburg Group has ever been made.

11. When this matter was first listed before me for case management, I drew Ms Cavar’s attention to the ASIC extract and to the problems it posed for her. I told her that, unless the Court were to grant leave to proceed against the company, it had no power to hear her application. I recommended that she seek legal advice and also ordered that she notify the administrator and serve her documents on him. She wrote to the administrator but does not appear to have sought legal advice. In response to that letter, Dane Skinner advised the Court that he had been appointed liquidator on 4 June 2021, that Heckenburg Group remains in liquidation and pursuant to s 471B of the Corporations Act a person cannot bring proceedings without the leave of the Court. In his report to creditors, which was attached to his letter, the liquidator stated that he had been appointed pursuant to a resolution of the company’s members.

12. Rather than applying for leave, Ms Cavar wrote to the Court asserting that what she was told was “TOTALLY FALSE AND NOT RELEVANT” (her emphasis and capitalisation) because she had brought the proceedings under the Competition and Consumer Act. There mere fact that her documents were accepted for filing by the court below or, for that matter, this Court, is beside the point.

13. Ms Cavar’s assertion must be rejected.

14. Each of sections 471B and 500(2) operates as a statutory stay of proceedings. They apply to any proceeding in any court against a company regardless of the cause of action or the nature of the relief sought. Thus, contrary to Ms Cavar’s submission, the fact that Heckenburg Group is in liquidation is unquestionably relevant. Without a grant of leave, she cannot prosecute her application for leave to appeal.

15. In these circumstances, all the Court may do is give effect to the statutory stay. The liquidator’s report to creditors, which was attached to his letter to the Court, records that he was appointed pursuant to a resolution of the company’s members. It is not entirely clear whether Heckenberg Group is being wound up in insolvency or the members’ winding up has become a creditors’ voluntary winding up: see Corporations Act, s 496. Given the liquidator’s advice that s 471B applies, I infer that the company is now being wound up in insolvency (see s 496(1)(a)). On that basis I will make a declaration under s 471B, rather than s 500(2). In practical terms, the effect is the same. At this point, it is unnecessary and inappropriate to explore the implications of the primary judge’s oversight and Ms Cavar’s failure to seek leave in the court below.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann.

Associate:

Dated: 8 November 2022