Growthbuilt Pty Ltd v Huses Electrics Pty Ltd

[2024] NSWSC 1378

Supreme Court

New South Wales

Medium Neutral Citation:

Growthbuilt Pty Ltd v Huses Electrics Pty Ltd [2024] NSWSC 1378

Hearing dates:

25 October 2024

Date of orders:

30 October 2024

Decision date:

30 October 2024

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

Second Defendant’s First Cross-Claim Cross-Summons and Cross List Statement be struck out; Second Defendant pay the Plaintiff’s costs of the motion

Catchwords:

CIVIL PROCEDURE – commencement of proceedings – where second defendant purports to bring a cross-claim against plaintiff seeking relief that could only properly be brought by first defendant – second defendant is the sole director of the first defendant – where leave is required to represent a company – leave not sought – cross-claim struck out for incompetence

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Corporations Act 2001 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Connectland Pty Ltd v Porthaven Pty Ltd [2011] NSWSC 616

Damjanovic v Maley (2002) 55 NSWLR 149; [2002] NSWCA 230

Re GJ Mannix Ltd [1984] 1 NZLR 309

Category:

Procedural rulings

Parties:

Growthbuilt Pty Limited (Plaintiff/First Cross-Defendant/Applicant)
Huses Electrics Pty Ltd (First Defendant/Respondent)
Hussein Mougarbel (Second Defendant/Cross-Claimant/Respondent)

Representation:

Counsel:
B Le Plastrier / S Powrie (Plaintiff/First Cross-Defendant/Applicant)

Solicitors:
Gilbert + Tobin (Plaintiff/First Cross-Defendant/Applicant)
H Mougarbel (Second Defendant/Cross-Claimant/Respondent)

File Number(s):

2024/238811

JUDGMENT

1. By subcontract dated 13 May 2022, the plaintiff, Growthbuilt Pty Ltd (“Growthbuilt”), engaged the first defendant, Huses Electrics Pty Ltd (“Huses Electrics”), to provide electrical and fire services in relation to a development in Bellevue Hill.

2. The second defendant, Mr Hussein Mougarbel, was named in the contract as a guarantor of the obligations of Huses Electrics.

3. Growthbuilt brings these proceedings seeking damages against Huses Electrics under the contract and against Mr Mougarbel in relation to his guarantee.

4. On 19 September 2024, Mr Mougarbel purported to bring a Cross-Claim, in his own name, against Growthbuilt seeking damages and other relief that could only properly be brought by Huses Electrics.

5. By Notice of Motion filed on 27 September 2024, Growthbuilt seeks to have that Cross-Claim struck out.

6. Such rights as Huses Electrics may have under the contract can only be pursued by Huses Electrics. Absent leave under s 237 of the Corporations Act2001 (Cth), and none is sought, such relief cannot be sought by Mr Mougarbel. The Cross-Claim is incompetent and must be struck out.

7. It remains a matter for Huses Electrics whether it wishes to bring a Cross-Claim.

8. Mr Mougarbel currently appears for himself and has purported to appear for Huses Electrics.

9. The general rule is that a company can only bring proceedings in this Court by a solicitor.

10. Thus, Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 7.1(2), provides:

“A company within the meaning of the Corporations Act 2001 of the Commonwealth—

(a)   may commence and carry on proceedings in any court by a solicitor or by a director of the company …”

11. Rule 7.1(3) qualifies that rule as follows:

“In the case of proceedings in the Supreme Court, subrule (2)(a) authorises a company to commence proceedings by a director only if the director is also a plaintiff in the proceedings.”

12. Rule 7.2(1) provides:

“A person who commences or carries on proceedings in the Supreme Court or District Court—

(a)    as the director of a company within the meaning of the Corporations Act 2001 of the Commonwealth, or

(b)   as the authorised officer of a corporation (other than a company within the meaning of the Corporations Act 2001 of the Commonwealth),

must file with the originating process, notice of appearance or defence, as the case may be, an affidavit as to his or her authority to act in that capacity, together with a copy of the instrument evidencing that authority.”

13. The affidavit referred to in UCPR r 7.2(1) must comply with UCPR r 7.2(2), which provides:

“The affidavit made by the director of a company within the meaning of the Corporations Act 2001 of the Commonwealth must contain—

(a)   a statement to the effect that—

(i)   the director is a director of the company, and

(ii)   the director has been authorised by a resolution of the directors duly passed at a meeting of directors held on a specified date (which must not be earlier than 21 days before the date of the affidavit) to commence and carry on the proceedings, as the case requires, and

(iii)   the authority has not been revoked, and

(iv)   the director is aware that he or she may be liable to pay some or all of the costs of the proceedings, or

(b)   a statement to the effect that—

(i)   the director is the managing or governing director of the company and has authority to exercise the powers of the directors, and

(ii)   the director is aware that he or she may be liable to pay some or all of the costs of the proceedings.”

14. Despite these rules, the Court has an incidental power to control its own processes and can grant leave to any person to appear on behalf of a litigant. ^[1]

    1. See, for example, Damjanovic v Maley (2002) 55 NSWLR 149; [2002] NSWCA 230 at [33], [37] (Stein JA, Mason P and Sheller JA agreeing).

15. Further, s 14 of the Civil Procedure Act 2005 (NSW) confers a discretion on the Court to dispense with any rule requirement for legal representation, and with any other formality relating to representation in the proceedings. ^[2]

    2. Connectland Pty Ltd v Porthaven Pty Ltd [2011] NSWSC 616 at [19] (White J).

16. That discretion is generally only exercised in favour of a director wishing to appear on behalf of a company in emergency circumstances or in relation to straightforward matters. ^[3]

    3. Damjanovic v Maley (supra) at [47], [54]-[55] (Stein JA, Mason P and Sheller JA agreeing), citing Re GJ Mannix Ltd [1984] 1 NZLR 309 at [314] (Cooke J).

17. Mr Mougarbel should not assume that the Court will exercise its discretion so as to permit him to represent Huses Electrics in any cross-claim against Growthbuilt.

18. Mr Mougarbel should understand that the usual rule is that the Court will only permit a company to bring proceedings, including a cross-claim, by a solicitor.

19. I order that the second defendant’s First Cross-Claim Cross-Summons and Cross List Statement be struck out.

20. I order that the second defendant pay the plaintiff’s costs of the plaintiff’s Notice of Motion of 27 September 2024.

**********

Endnotes