Glaister v Banwell Pty Ltd (ACN 009 394 585) (Subject to a Deed of Company Arrangement)
[2003] WASC 101
GLAISTER -v- BANWELL PTY LTD (ACN 009 394 585) (Subject to a Deed of Company Arrangement) [2003] WASC 101
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 101 | |
| Case No: | COR:140/2003 | 20 MAY 2003 | |
| Coram: | MASTER SANDERSON | 27/05/03 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Leave to proceed granted Defendant ordered to produce policy of insurance | ||
| A | |||
| PDF Version |
| Parties: | DONALD GLAISTER BANWELL PTY LTD (ACN 009 394 585) (Subject to a Deed of Company Arrangement) |
Catchwords: | Corporations Act Application for leave to proceed against a company subject to a deed of company arrangement Principles to be applied Application for discovery and production of any policy of insurance |
Legislation: | Corporations Act, s 440D(1)(a), s 444E(3), s 471B |
Case References: | Lopez v Star World Enterprises Pty Ltd, unreported; Fed Ct of A (Vic); 18 April 1997 Meehan & Anor v Stockmans Australian Café (Holdings) Pty Ltd & Anor (1997) 15 ACLC 62 Re Gordon Grant & Grant Pty Ltd (1982) 1 ACLC 196 Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19 Fox Craft v Inc Group Pty Ltd (1994) 15 ACSR 203 JB Records v Brashes Pty Ltd (Voluntary Administrator Appointed) (1994) 13 ACSR 680 Re AJ Benjamin Ltd (1969) 90 WN (Pt 1) 107 Re Coastal Constructions Pty Ltd (In Liq) (1994) 13 ACSR 329 Re Sydney Formworks Pty Ltd (1965) NSWR 646 Surber v Lean (2001) 19 ACLC 369 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BANWELL PTY LTD (ACN 009 394 585) (Subject to a Deed of Company Arrangement)
Defendant
Catchwords:
Corporations Act - Application for leave to proceed against a company subject to a deed of company arrangement - Principles to be applied - Application for discovery and production of any policy of insurance
Legislation:
Corporations Act, s 440D(1)(a), s 444E(3), s 471B
(Page 2)
Result:
Leave to proceed granted
Defendant ordered to produce policy of insurance
Category: A
Representation:
Counsel:
Plaintiff : Mr K G Robson & Ms R L Coombs
Defendant : Mr I R Freedman
Solicitors:
Plaintiff : Slater & Gordon
Defendant : Phillips Fox
Case(s) referred to in judgment(s):
Lopez v Star World Enterprises Pty Ltd, unreported; Fed Ct of A (Vic); 18 April 1997
Meehan & Anor v Stockmans Australian Café (Holdings) Pty Ltd & Anor (1997) 15 ACLC 62
Re Gordon Grant & Grant Pty Ltd (1982) 1 ACLC 196
Case(s) also cited:
Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19
Fox Craft v Inc Group Pty Ltd (1994) 15 ACSR 203
JB Records v Brashes Pty Ltd (Voluntary Administrator Appointed) (1994) 13 ACSR 680
Re AJ Benjamin Ltd (1969) 90 WN (Pt 1) 107
Re Coastal Constructions Pty Ltd (In Liq) (1994) 13 ACSR 329
Re Sydney Formworks Pty Ltd (1965) NSWR 646
Surber v Lean (2001) 19 ACLC 369
(Page 3)
1 MASTER SANDERSON: This is the return of the plaintiff's originating process seeking the following orders:
"1. The Plaintiff be granted leave pursuant to section 444E(3)(a) of the Corporations Act to proceed with Action 2793 of 2000 in the District Court of Western Australia against the Defendant, Banwell Pty Ltd (Subject to a Deed of Company Arrangement).
2. The Plaintiff not execute on any judgment without leave of the Supreme Court of Western Australia.
3. The Defendant provide to the Plaintiff's solicitors for inspection any public liability insurance contract made between the Defendant and Shipowners Mutual Protection or any other insurer in respect of or covering the date 3 March 2000 in respect of any liability the Defendant may have to the Plaintiff in relation to the allegations made in the District Court proceedings."
2 The facts giving rise to this application are not in dispute. They emerge from an affidavit of Hayden James Stephens ("Mr Stephens") sworn 7 May 2003. Mr Stephens is a solicitor who has conduct of this action. He notes that the defendant is presently subject to a Deed of Company Arrangement ("DOCA"). The plaintiff commenced proceedings in the District Court on 27 October 2000. The plaintiff's claim is for damages for personal injury he sustained as a result of falling from a ramp whilst disembarking from the ferry "Seaflyte" at the Rottnest Island jetty on 3 March 2000. The plaintiff alleges that the ferry was owned, operated or controlled by the defendant and that his injuries resulted from the negligence of the defendant's servants, agents or employees. There have been a number of pre-trial conferences held before a Registrar of the District Court and the matter was entered for trial on 17 December 2001.
3 On 12 June 2002 Messrs Cocks Macnish, the solicitors for the defendant, wrote to the plaintiff's solicitors advising that the defendant had slipped into administration and that in addition, a receiver and manager had been appointed. As a consequence of the defendant being in administration, the District Court proceedings were stayed. On 25 September 2002 the plaintiff's solicitors wrote to the administrator requesting the administrator's consent pursuant to s 440(D)(1)(a) of the Corporations Act to proceed with the action against the defendant. After
(Page 4)
- some delay the administrator advised the plaintiff's solicitors by way of letter dated 9 December 2002 that he was not prepared to consent to the plaintiff's action proceeding. By letter dated 13 January 2003 the administrator advised the plaintiff's solicitors that the DOCA had been executed by the defendant on 13 December 2002. Included with this letter was a Form 534 (Notice Inviting Formal Proof of Debt or Claim) and a Form 535 (Formal Proof of Debt or Claim). The Form 535 was completed by the plaintiff's solicitors and returned to the deed administrator under cover of letter dated 7 February 2003.
4 The plaintiff's solicitors have made enquiries as to whether or not the defendant was insured against the relevant liability at the relevant time. On 24 September 2002 the plaintiff's solicitors wrote to Messrs Cocks Macnish asking them to confirm that the defendant was insured by Shipowners Mutual Protection Indemnity Society ("the P & I Club") and that the P & I Club had agreed to indemnify the defendant in respect of the action. Messrs Cocks Macnish responded that they were not prepared to provide the information requested by the plaintiff's solicitors.
5 In his letter to the plaintiff's solicitors dated 9 December 2002 the administrator said, when referring to the request that he consent to the action proceeding:
"I am currently discussing the matter with Banwell's Insured's solicitors, Cocks Macnish."
6 On 16 April 2003 the plaintiff's solicitors spoke with a Mr Simon Theobald ("Mr Theobald"), a representative of the DOCA administrator. Mr Theobald indicated he was not prepared to disclose the name of the relevant insurer. Quite how it is that the plaintiff's solicitors have concluded that the defendant is insured by the P & I Club does not emerge from Mr Stephens' affidavit.
7 The application is brought under the provisions of s 444E(3) of the Corporations Act. That section reads as follows:
"The person cannot:
(a) begin or proceed with a proceeding against the company or in relation to any of its property; or
(b) begin or proceed with enforcement process in relation to the property of the company; except:
(Page 5)
- (c) with the leave of the Court; and
(d) in accordance with such terms (if any) as the Court imposes."
8 Both in his written and oral submissions counsel for the defendant likened the position of the present defendant to that of a company under administration. With respect, in my view the two positions are entirely different. In Meehan & Anor v Stockmans Australian Café (Holdings) Pty Ltd & Anor (1997) 15 ACLC 62, Lehane J, when dealing with a similar submissions, said (at 65):
"So far as Counsel and I have been able to discover, there is no reported authority as to the principles to be applied on an application for leave under subs 444E(3). Counsel proceeded on the basis that the principles applicable are those which the Court applies when considering a similar application in a winding-up by the Court, under s 471B. No doubt deeds of company arrangement may take many forms, and different considerations may apply in other cases, but in this case (and I shall return to the general effect of the present deed) I think the basis on which counsel proceeded was right. Particularly I do not think that the very strict approach which may be apt where an administrator has been appointed under Division 2 of Part 5.3A, having regard to the interim character of such an appointment, … is appropriate here."
9 The principles to be applied in a leave to proceed application against a company in liquidation (a s 471B application) were set out in the often-quoted case of Re Gordon Grant & Grant Pty Ltd (1982) 1 ACLC 196 at 199. Master Lee QC (as his Honour then was) set out eight broad principles of general application. On this application three are relevant:
"(3) There must be no prejudice to the creditors or to the orderly winding-up of the company if the action is allowed to proceed.
…
(5) Leave is more likely to be granted where there is an insurance company standing behind the company to pay any judgment which the plaintiff might obtain against it. If successful, such an action is unlikely to prejudice the
(Page 6)
- creditors or the company: … the section is not designed to protect an insurer.
- (6) A condition is often imposed that the plaintiff will not enforce any judgment against the company without the leave of the Court. This ensures that the Court retains ultimate control."
10 In this case no evidence has been produced on behalf of the defendant that there is no insurer standing behind the defendant. In fact, the evidence, such as it is, gives every indication that there is, in fact, an insurer involved and that, up until the time the defendant was placed in administration, it was the insurer who had conduct of the proceedings. While the evidence on this issue led by the plaintiff is not strong, the conclusion that there is an insurer involved is reasonable. That being so, applying the s 471B test, leave ought be granted. An order also ought be made in terms of par 2 of the originating process. That will allow the Court to ensure that no steps are taken to dissipate the assets of the defendant in satisfying any judgment which might be obtained in the District Court.
11 That then leaves the question of whether or not the defendant ought be ordered to produce any public liability insurance policy it may hold which is relevant to the plaintiff's claim. I would accept, as is submitted on behalf of the defendant, that the insurance policy would not be discoverable in the ordinary course of the District Court proceedings between the plaintiff and the defendant. It is not a document related to a matter in issue between the parties. But this is a somewhat different position.
12 In Lopez v Star World Enterprises Pty Ltd, unreported; Fed Ct of A (Vic); 18 April 1997, Olney J, dealing with an application for disclosure of any policy of insurance allied with an application for leave to proceed against a company in administration under s 440D(1) of the (then) Corporations Law, ordered that any policy of insurance covering the claim be provided to the plaintiff's solicitors. It is true, as was pointed out by counsel for the defendant, that his Honour's judgment is short and appears to have been given extempore. Counsel submitted that there was no warrant under s 444E(3) of the Act or any other section for the disclosure of a policy of insurance.
13 In his judgment, Olney J referred by way of analogy to s 562 of the Corporations Act. That section requires a liquidator to pay to a third party
(Page 7)
- any proceeds of a policy of insurance which may be paid to the company in liquidation pursuant to the policy. His Honour makes the point that in any proceedings brought by the third party, a copy of the policy of insurance would be discoverable. That is undoubtedly correct. However, it is, I think, with respect, a little difficult to see how the present application is analogous to an application under s 562.
14 In any event, I am satisfied that the order requiring the disclosure of any policy of insurance should be made. I think the matter can be dealt with in this way. The plaintiff has issued an originating process against the defendant seeking leave to proceed against a company subject to a DOCA. The principles which govern such an application include consideration of whether or not the defendant has a relevant policy of insurance. There is no reason why the plaintiff would not be entitled to discovery on such an application. Although I have indicated that I would make an order allowing the plaintiff to proceed in the District Court, that is not the end of the matter. In other words, the plaintiff is not obtaining discovery after judgment. The orders proposed by the plaintiff anticipate the plaintiff not being permitted to move to execution on any judgment it may obtain in the District Court without leave of this Court. To that extent the orders I propose to make are executory. Discovery, in particular the limited discovery sought by the plaintiff, is necessary for the proper disposition of the originating process.
15 Accordingly I will make orders largely in terms of those sought by the plaintiff in its originating process. However, I will hear the parties as to the precise form of orders and as to costs.
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