Hall v Kwik Transport & Crane Hire Pty Ltd (in Liquidation)
[2023] WASC 465
•5 DECEMBER 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: HALL -v- KWIK TRANSPORT & CRANE HIRE PTY LTD (IN LIQUIDATION) [2023] WASC 465
CORAM: MUSIKANTH J
HEARD: 21 NOVEMBER 2023 & 5 DECEMBER 2023
DELIVERED : 5 DECEMBER 2023
PUBLISHED : 5 DECEMBER 2023
FILE NO/S: COR 167 of 2023
BETWEEN: TREVOR GERALD HALL
Plaintiff
AND
KWIK TRANSPORT & CRANE HIRE PTY LTD (IN LIQUIDATION)
Defendant
Catchwords:
Application pursuant to s 471B of Corporations Act for leave to commence proceedings against company in liquidation - Where application should have been brought pursuant to s 500(2) - Relevant principles - Application to amend originating process and orders - Nature of orders granting leave to commence proceedings - Discretion to amend or vary such orders - Inherent jurisdiction -Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 471B, s 500(2)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr W G Spyker |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Spyker Legal |
| Defendant | : | No appearance |
Case(s) referred to in decision(s):
Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408
Monaco v Arnedo Pty Ltd (1994) 13 WAR 522
QBE Insurance Ltd & Suncorp Metway Insurance Ltd v Aulich [2003] ACTCA 16; (2003) 152 ACTR 1
MUSIKANTH J:
(These reasons were delivered orally at the conclusion of the hearing on 5 December 2023. They have been edited to correct matters of grammar and infelicity of expression, and to add hearings and full references.)
Introduction
On 3 November 2023, the plaintiff applied for an order pursuant to s 471B of the Corporations Act 2001 (Cth) (Act) for leave to proceed against the defendant company in liquidation.
The application was brought in circumstances where the plaintiff alleges he suffered an injury, on 12 December 2020, in the course of his employment with the defendant.
After being served with the application, the liquidators of the defendant company advised the plaintiff's solicitors that they did not oppose the application.
Given the looming expiry of the relevant 3-year limitation period, the plaintiff sought to have his application heard on an expedited basis.
The application was heard by me on 21 November 2023.
At the conclusion of that hearing, I made the following orders (November Orders):
(a)The plaintiff be granted leave pursuant to section 471B of the Act, to begin and proceed with an action in the District Court of Western Australia against the defendant.
(b)The plaintiff not execute on any judgment without leave of the Supreme Court of Western Australia.
(c)The application otherwise be adjourned sine die.
(d)The costs of the application be costs in the District Court proceedings foreshadowed by [the order reflected at (a)] above.
However, after the November Orders were made it emerged that the defendant had, in fact, been placed in liquidation in consequence of a resolution by creditors of the defendant for its voluntary winding up.
Such an event would have enlivened the Court's power to entertain an application for leave under s 500(2) of the Act, as distinct from s 471B which only applies when a company is being wound up in insolvency or by the Court, or where a provisional liquidator is acting.
On 28 November 2023, the plaintiff commenced an action in the District Court of Western Australia by writ of summons against the defendant company (District Court proceedings).
In the indorsement to his writ, the plaintiff alleges that he sustained injuries in the course and scope of his employment with the defendant, such injuries having occurred on 12 December 2020 by reason of the negligence and/or breach of contract and/or breach of statutory duty of the defendant, its servants and/or agents.
On 1 December 2023, the plaintiff applied to this Court for orders to the following effect:
(a)The plaintiff have leave to amend his originating process, filed on 3 November 2023, to include reference to the application being made pursuant to s 500(2) of the Act.
(b)The November Orders be set aside.
(c)The plaintiff be granted leave nunc pro tunc pursuant to s 500(2) of the Act to begin and proceed with the District Court proceedings.
(d)The plaintiff not execute on any judgment without leave of this Court.
(e)The application be otherwise adjourned sine die.
(f)The costs of the application be costs in the District Court proceedings.
The liquidators of the defendant company were notified of the plaintiff's further application, and have advised the Court that they have no objections to the proposed orders.
Application for leave to proceed: principles
Section 500(2) of the Act provides that after the passing of a 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.
The principles relevant to an application under s 500(2) were outlined by Beech J (as his Honour then was) in Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334 [4] - [15], and re-iterated by his Honour in Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [8] - [14], following a survey of the authorities.
Gratefully drawing on his Honour's analysis, those principles may be summarised as follows:
(a)Part of the purpose of the requirement for leave is to avoid a company in liquidation being subject to a multiplicity of time consuming and expensive actions.
(b)The 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.
(c)It 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.
(d)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 amount of damages awarded against it. The court should not give its imprimatur to fruitless proceedings which would involve a waste of time and money.
(e)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.
(f)The 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.
(g)A claimant seeking leave need only demonstrate a serious question to be tried.[1]
[1] Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [8] - [14] (Citations omitted).
As his Honour also noted, the same principles that govern the grant of leave under s 500(2) of the Act also govern the grant of leave under s 471B.[2]
[2] Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [7].
The plaintiff's claim
In his affidavit sworn 3 November 2023, in this Court, the plaintiff relevantly gave evidence to the following effect.
First, the defendant's workers' compensation insurer had on 29 March 2021 accepted a claim by the plaintiff relating to his injury.
Secondly, the plaintiff's degree of permanent whole person impairment was assessed by a medical practitioner on 5 September 2023 to be 20%.
Thirdly, the plaintiff wished to pursue an action for common law damages against the defendant in respect of the injury.
Fourthly, on 27 September 2023 the plaintiff had duly elected, pursuant to s 93K(4) of the Workers' Compensation and Injury Management Act 1981 (WA), to retain the right to seek such damages against the defendant, and WorkCover WA registered the plaintiff's election the following day.
Fifthly, on 11 October 2023, the solicitors acting for the defendant's insurers, Allianz, advised the plaintiff's solicitors that Allianz would 'indemnify [the defendant] in respect of a common law claim which [the plaintiff] may pursue arising from the injuries sustained in the course of his employment on 12 December 2020'.
Before granting the November Orders, I had formed the view, on the strength of the above evidence, that the plaintiff had demonstrated a serious question to be tried.
Further, given Allianz's advice that it would indemnify the defendant in respect of a common law claim by the plaintiff arising from his injuries, I considered that the risk that proceedings against the defendant would be fruitless, if leave were granted, was very significantly reduced.
In short, I was satisfied there would be no prejudice to creditors in those circumstances.
I remain so satisfied.
Amendment of originating process, fresh orders
There is no doubt that an order granting leave to commence proceedings is interlocutory: QBE Insurance Ltd & Suncorp Metway Insurance Ltd v Aulich [2003] ACTCA 16; (2003) 152 ACTR 1 [14].
As such, the Court enjoys a larger discretion to discharge or vary the November Orders than might otherwise have been the case: cf. Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [23] (Steytler P).[3]
[3] See also Pullin JA at [70].
Further, as the learned President also observed in Commonwealth of Australia v Albany Port Authority, the Court has an inherent jurisdiction to rectify situations of injustice.[4]
[4] Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [24] (Steytler P), referring to Monaco v Arnedo Pty Ltd (1994) 13 WAR 522, 524 (Malcolm CJ, Kennedy J agreeing).
In this matter, the plaintiff initially applied for relief under the incorrect statutory provision.
Evidently that occurred in circumstances involving inadvertence.
This led to the November Orders being made in error.
In my view, the combined effect of the above matters, the fact that the principles applicable to the grant of leave under s 471B and s 500(2) are identical, and the apparent absence of prejudice to any other party, all lead to the conclusion that relief should be granted to the plaintiff substantially in accordance with his further application.
Orders
I make the following orders:
(a)The plaintiff have leave to amend his originating process, filed in this matter on 3 November 2023, such as to include reference to the application being made pursuant to s 500(2) of the Corporations Act 2001 (Cth).
(b)The Orders made on 21 November 2023 by the Court in this matter be set aside.
(c)The plaintiff be granted leave nunc pro tunc pursuant to s 500(2) of the Corporations Act 2001 (Cth) to begin and proceed with action CIV 5939 of 2023 in the District Court of Western Australia.
(d)The plaintiff not execute on any judgment without leave of this Court.
(e)The application be otherwise adjourned sine die.
(f)The costs of the application be costs in the proceedings referred to in (c) above save for the costs of and associated with:
(i)the preparation of the plaintiff's minute of proposed orders dated 1 December 2023;
(ii)the preparation of the affidavit of Warnar Geert Spyker sworn, 1 December 2023; and
(iii)the appearance before the Court on 5 December 2023,
in relation to which further attendances there shall be no order as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CH
Associate to Justice Musikanth
5 DECEMBER 2023
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