GALATI-SARDO v Career BOSS WA Pty Ltd (in Liq)

[2021] WASC 278

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   GALATI-SARDO -v- CAREER BOSS WA PTY LTD (IN LIQ) [2021] WASC 278

CORAM:   STRK J

HEARD:   5 AUGUST 2021

DELIVERED          :   5 AUGUST 2021

PUBLISHED           :   13 AUGUST 2021

FILE NO/S:   COR 119 of 2021

BETWEEN:   MATTHEW GALATI-SARDO

Plaintiff

AND

CAREER BOSS WA PTY LTD (IN LIQ)

Defendant

Catchwords:

Corporations - Application for leave to commence and proceed with an action against a company in external administration - 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	:	S N Brunetto
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Brand Barristers & Solicitors
Defendant	:	No applicable

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

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

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

STRK J:

(This decision was delivered extemporaneously on 5 August 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 to commence and proceed with an action 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, the application was made pursuant to s 471B of the Corporations Act 2001 (Cth).

The application and factual background

1. The application was made by an originating process filed on 15 July 2021.  A minute of proposed amended originating process was filed on 5 August 2021 and the plaintiff moved for orders in terms of that amended originating process.  The application is supported by three affidavits: the affidavit of Sebastiana Natasha Brunetto, solicitor for the plaintiff, sworn on 15 July 2021; the supplementary affidavit of Ms Brunetto sworn on 3 August 2021; and a further affidavit of Ms Brunetto sworn on 5 August 2021.  All affidavits were read at the hearing of the application.

2. Dino Bernardio Calvisi was appointed as liquidator to the defendant on 11 January 2021, and the defendant continues to be a registered company externally administered.

3. Ms Brunetto, among other things, deposes to the following.

4. Ms Brunetto's firm was recently instructed by the plaintiff to represent him in relation to personal injuries the plaintiff says he suffered on 23 August 2018, during the course of his employment with Building Corporation Pty Ltd at 77 South Perth Esplanade, South Perth.

5. Ms Brunetto deposes that on or around 5 July 2021, the plaintiff instructed her firm to commence proceedings against the defendant in the District Court of Western Australia for damages resulting from the personal injuries the plaintiff says he suffered in the accident.  The plaintiff alleges that the accident was caused by the negligence of the defendant and/or its servant and agents.

6. Ms Brunetto deposes to the circumstances in which the plaintiff was allegedly injured.  She deposes that a crane operator, who was an employee of the defendant, crushed the plaintiff's left foot with a pallet of steel causing the plaintiff to sustain injury.

7. Ms Brunetto annexes to her first affidavit a copy of a certificate of currency of insurance in favour of the defendant with Sura Labour Hire Pty Ltd, which certificate is dated 15 December 2017.  The certificate names the defendant as an insured and notes the period of insurance as being 15 December 2017 - 1 December 2018 at 4.00 pm.[2]  The 'Policy Class' noted in the certificate of currency is a 'Labour Force Professional Liability Insurance Policy'.  Ms Brunetto deposes to her belief that the policy of insurance with Sura is a valid policy held by the defendant in the relevant period that would respond to the plaintiff's claim.

   [2] Affidavit of S N Brunetto sworn 15 July 2021 'SNB-4'.

8. Ms Brunetto further deposes to her belief that if the plaintiff is not granted leave to commence and proceed with his action for damages against the defendant, he will suffer injustice in that he will forever be precluded from pursing such a claim against the defendant.

9. Annexed to Ms Brunetto's first affidavit is a copy of a current company extract for the defendant procured from the Australian Securities and Investments Commission on 25 June 2021.[3]  The search reveals that the liquidator was appointed on 11 January 2021 by creditors' voluntary winding up.

   [3] Affidavit of S N Brunetto sworn 15 July 2021 'SNB-1'.

10. By her supplementary affidavit sworn 3 August 2021, Ms Brunetto deposes to having served the originating process and her first affidavit sworn in support of the same on the liquidator by letter dated 15 July 2021.[4]

    [4] Affidavit of S N Brunetto sworn 3 August 2021 'SNB-1'.

11. Ms Brunetto deposes that on 3 August 2021, the liquidator confirmed that he intended to neither consent to nor oppose the application.[5]  Ms Brunetto further deposes to her communications with the liquidator whereby the liquidator was put on notice of the plaintiff's minute of proposed amended originating process and in which the liquidator confirmed that he had no objection to the amendments proposed.[6]

    [5] Affidavit of S N Brunetto sworn 3 August 2021 'SNB-3'.

    [6] Affidavit of S N Brunetto sworn 5 August 2021 'SNB-3' and 'SNB-4'.

Whether leave should be granted

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.[7]

   [7] 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 Gran 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 (albeit not the direct evidence of the plaintiff). The amount of the plaintiff's claim has not been quantified nor estimated. I have weighed in the balance the nature of the plaintiff's claim and its seriousness, to the extent that these matters are disclosed in the affidavit filed in support of the application.

2. I have carefully weighed in the balance the status of the defendant company, being a company in liquidation.  In such circumstances, there would be good reason to refuse leave if there was no prospect of surplus assets in the defendant company or no insurance.  In this case, there is evidence of insurance.  However, the affidavit evidence does not reveal whether Sura has yet been put on notice of the plaintiff's claim, and if so, Sura's position in relation to the same.  I have weighed all of these matters in the balance.

3. On the evidence before me, there appears to be an insurance policy in place at the time the alleged incident occurred.  The willingness of the insurer to respond, the breadth of coverage, and whether or not the insurer will ultimately respond are matters which cannot be discerned from the affidavit material.

4. However, counsel has proferred 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 amended minute of proposed orders filed on 5 August 2021 contemplates that the plaintiff would not be permitted to enforce any judgment that ultimately might be secured against the defendant without the leave of this court.  It is envisaged that upon enforcement, this court may revisit the matter of insurance and whether the insurer will meet any judgment.

5. In all of the circumstances, I am satisfied that there is a serious question to be tried.  The evidence concerning the Sura policy (that is, the certificate of currency annexed to Ms Brunetto's first affidavit) tips the balance in favour of leave being granted.

6. In all of the circumstances and for these reasons, I find that it is appropriate that leave be granted. 

Orders

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

   1.The plaintiff have leave to amend the originating process as proposed by and in the form of the amended originating process filed on 5 August 2021.

   2.The words 'in liquidation' be added to the name of the defendant in this proceeding.

   3.The plaintiff have leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to commence and proceed with an action as against the defendant in the District Court of Western Australia for damages arising from the personal injuries alleged to have been suffered by the plaintiff on or about 23 August 2018 at 77 South Perth Esplanade, South Perth, in Western Australia.

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

   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

13 AUGUST 2021