Funds First Pty Ltd & 2 ors v Owners Corporation Strata Plan 66609 & 10 ors

[2008] NSWSC 422

CITATION:	Funds First Pty Ltd & 2 ors v Owners Corporation Strata Plan 66609 & 10 ors [2008] NSWSC 422
HEARING DATE(S):	7 March 2008
JURISDICTION:	Equity Division Expedition List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	7 March 2008
DECISION:	Leave granted to commence separate proceedings claiming leave to proceed.
CATCHWORDS:	CORPORATIONS – external administration – winding up – creditor’s voluntary winding up – leave to proceed against company in liquidation – whether application appropriately brought by motion in proceedings in which no relief will be sought against company – where proceedings if continued will jeopardise only asset of company – where liquidator neither consents nor opposes leave to proceed.
LEGISLATION CITED:	(CTH) Corporations Act 2001, ss 446A, 471B, 500
CATEGORY:	Procedural and other rulings
PARTIES:	4213/07 Fundsfirst Pty Ltd (first plaintiff) Cannes Management Pty Ltd (second plaintiff) Kerry Baranov (third plaintiff) Owners Corporation Strata Plan 66609 (first defendant) Greg Cook (second defendant) Phoung TH Nguyen (third defendant) Andrew Smith (fourth defendant) Ms B Stevens (fifth defendant) Joseph Jean Espriritu (sixth defendant) Leanne Marie Scanes (seventh defendant) Clive Mancey (eighth defendant) Dianne Mancey (ninth defendant) Ronald Wood (tenth defendant) R Yip (eleventh defendant) 1839/08 Owners Corporation Strata Plan 66609 (first plaintiff) Greg Cook (second plaintiff) Phoung TH Nguyen (third plaintiff) Thelma Cook (fourth plaintiff) F&R (No 18) Pty Ltd (in liq) (first defendant) Steven Nicols (Liquidator) (second defendant)
FILE NUMBER(S):	SC 4213/07; 1839/08
COUNSEL:	Mr JB Simpkins SC (plaintiffs) Mr MW Sneddon (defendants)
SOLICITORS:	Browne & Co (plaintiffs) Macpherson Greenleaf (defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Friday, 7 March 2008

4213/07 Funds First Pty Ltd & 2 Ors v Owners Corporation Strata Plan 66609 & 10 Ors
1839/08 Owners Corporation SP66609 v F&R (No 18) Pty Ltd (in liq)

JUDGMENT (ex tempore)

1 HIS HONOUR: The applicant defendants seek leave to file an amended Notice of Motion, claiming an order that F&R (No 18) Pty Ltd (in liq) be joined as twelfth defendant, that the first to eleventh defendants have leave under (CTH) Corporations Act 2001, s 471B, to take proceedings against F&R, and such other and further orders that the Court considers appropriate.

2 The application is beset by misconceptions.

3 First, it is quite irregular to seek this relief by motion in the present proceedings. The appropriate course would be to file an originating process in the Corporations List, seeking leave to proceed against the company in liquidation. It may often be permissible to seek that leave by an interlocutory application in proceedings otherwise intended to be instituted in this Court, but there is no contemplation that any relief would be sought against F&R in the instant proceeding, and thus no utility in joining F&R as a party to them.

4 Secondly, the liquidation in question is a creditors’ voluntary winding up, brought about pursuant to Corporations Act, s 446A. In those circumstances, it is Corporations Act, s 500, not s 471B, that is the applicable provision.

5 Thirdly, the proceedings which it is proposed to continue, if leave be granted, are proceedings in the Consumer Trader & Tenancy Tribunal (“CTTT”), Home Building Division, in which the present first and second defendants were applicants and F&R was a respondent, which proceedings were dismissed by order of the CTTT in mid 2005 for failure of the applicants to comply with procedural directions, and the applicants were ordered to pay F&R's costs on an indemnity basis. If leave be granted, the present applicants propose to apply for an extension of time in which to appeal from the dismissal of those proceedings by the CTTT; then, if that extension be granted, to appeal the decision and, if successful, to have the accompanying costs order also set aside; and then perhaps to prosecute the original underlying proceeding, which was a building claim in the CTTT against F&R and its insurer. There would not appear to be any practical utility in pursuing the building claim against F&R, which is in liquidation; and leave would not be required to prosecute it against the insurer - if, as the applicants seem to think, they may bring an action directly against the insurer.

6 But, for present purposes, the most important consideration is that the costs order made in the CTTT in favour of F&R is the only known asset of the company in liquidation. If leave to proceed be granted, that asset will be in jeopardy. The real question for me is whether it is justifiable to place in jeopardy the only asset of the company in liquidation, particularly given the long period which has passed since the costs order was made. But for the circumstance that the liquidator has indicated that he neither consents to nor opposes the application, I think I would have refused leave. But, the liquidator having taken that approach, as evidenced by his correspondence with the applicants’ solicitors, I do not see that I should be overly concerned to protect the assets of the company in liquidation.

7 For that reason, I would grant the leave sought. This, of course, involves no judgment that the application for an extension of time, or any appeal, has merit; that will be entirely a matter for the CTTT. And, for the reason set out first above, I will not make orders in these proceedings 4213/07, but in fresh proceedings to be instituted.

8 Upon the undertaking of Andrew Campbell MacPherson, Solicitor, to pay the appropriate filing fees and to file by 12 March 2008 an originating process claiming leave under Corporations Act, s 500(2), to proceed against F&R, I grant leave to the first and second defendants to file such an originating process. I direct that the originating process be returnable before me on Friday 14 March 2008 at 10am. I dispense with further service of the originating process. I dispense with any requirement for an attendance or appearance on the return of the originating process.

**********