In the matter of Boss Constructions (NSW) Pty Ltd

[2018] NSWSC 1991

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Boss Constructions (NSW) Pty Ltd [2018] NSWSC 1991
Hearing dates:	10 December 2018
Decision date:	10 December 2018
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Order not made dispensing with r 7.1 of the Uniform Civil Procedure Rules 2005 (NSW) to permit director of the Plaintiff to conduct proceedings for the Plaintiff.
Catchwords:	CORPORATIONS – whether to dispense with r 7.1 of the Uniform Civil Procedure Rules 2005 (NSW) – where director and associated companies have previously applied to set aside creditor's statutory demands – where interests of the community and company’s creditors will be promoted by the independent judgment of a solicitor.
Legislation Cited:	- Civil Procedure Act 2005 (NSW) ss 56, 57, 58 - Corporations Act 2001 (Cth) ss 459H, 459J - Uniform Civil Procedure Rules 2005 (NSW) r 7.1
Cases Cited:	- Business Innovation Pty Ltd v Maddison Morgan and Bailey Pty Ltd [2018] NSWSC 1523 - Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270 - DB Mahaffy & Associates Pty Ltd v Mahaffy [2011] NSWSC 673 - JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; (2009) 75 NSWLR 745 - Re DB Mahaffy & Associates Pty Ltd [2012] NSWSC 776
Category:	Principal judgment
Parties:	Boss Constructions (NSW) Pty Ltd (Plaintiff) Deputy Commissioner of Taxation (Defendant)
Representation:	Solicitors: N Bobos (Director) K Minerds (Australian Taxation Office)
File Number(s):	2018/236156

Judgment – ex tempore (revised 14 december 2018)

1. By Originating Process filed on 1 August 2018, Boss Constructions (NSW) Pty Ltd (“Boss NSW”) sought orders under ss 459H or 459J of the Corporations Act 2001 (Cth) setting aside a creditor's statutory demand (“Demand”) issued by the Deputy Commissioner of Taxation. The Originating Process was filed under a cover sheet that stated that it was filed for Mr Nicholas Bobos trading as Boss NSW, although it is not entirely clear whether that was generated by Mr Bobos or by information that had been entered in the Court's electronic filing system. Where Boss NSW is a corporate entity, it cannot be a business name of Mr Bobos and he does not trade as that company.

2. Mr Bobos indicates, in his affidavit in support of the application to set aside the Demand, that he has been the sole director of another company, Bobos Engineering Australia Pty Ltd, for several years, and he is also the sole director of Boss NSW. He indicates that there is a dispute about the debt and amount, there is an agreement in regard to the debt, and there is an abuse of process against Boss NSW in the commencement of the proceedings, although all that has occurred to date is service of the Demand. The affidavit outlines various other aspects of the application.

3. I have drawn Mr Bobos' attention to rr 7.1(2)–(3) of the Uniform Civil Procedure Rules 2005 (NSW), which relevantly provide that, in this Court, a company may commence proceedings by its director only if the director is also a plaintiff in the proceedings. Mr Bobos cannot satisfy the requirement of that rule, because he personally has no standing to set aside the Demand. The question then is whether the Court should dispense with r 7.1 of the Uniform Civil Procedure Rules, as it would be entitled to do under the Civil Procedure Act 2005 (NSW) in an appropriate case. I must exercise the discretion whether to do so in a manner that will promote the just, quick and cheap resolution of the real issues in dispute in the proceedings, having regard to ss 56-58 of the Civil Procedure Act.

4. Mr Bobos submits that I ought to dispense with the operation of the relevant rule because he has been permitted to represent Boss NSW, or other companies, in other proceedings seeking to set aside other creditor's statutory demands, including at least one previous creditor's statutory demand issued by the Deputy Commissioner of Taxation and another by the Office of State Revenue. Mr Bobos submits that he has experience in the area. He submits that he does not wish to retain a solicitor, because solicitors are busy, they take on too many matters and he prefers to conduct the company's proceedings, using legal advice where necessary. That, however, deprives the community of the benefit of a solicitor, who owes duties to the Court, reaching an assessment as to whether a matter may properly be brought in proceedings in this Court and how the proceedings should be conducted. Mr Bobos also submits that he has been successful, for example, in recent proceedings in respect of a claim against the Office of State Revenue, in Chief Commissioner of State Revenue v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270. That “success” was of an unusual character, where the Court of Appeal’s conclusions were adverse to Boss NSW as to the matters in issue on the appeal, but the Court of Appeal also held the time in which the relevant creditor's statutory demand could give rise to a presumption of insolvency had lapsed and therefore made no orders on the appeal.

5. I drew Mr Bobos's attention to the principles applicable to whether the Court should dispense with the application of the relevant rule, which have been considered, for example, in JSBG Developments Pty Ltd v Kozlowski [2009] NSWSC 1128; (2009) 75 NSWLR 745 and DB Mahaffy & Associates Pty Ltd v Mahaffy [2011] NSWSC 673 and Re DB Mahaffy & Associates Pty Ltd [2012] NSWSC 776. In Business Innovation Pty Ltd v Maddison Morgan and Bailey Pty Ltd [2018] NSWSC 1523, Parker J recently had occasion to consider those authorities, and the importance of a legal practitioner’s professional obligations, in considering whether to dispense with the application of these rules, in respect of a director seeking to conduct proceedings to set aside a creditor's statutory demand.

6. I have regard to Mr Bobos's submission that he has conducted several of these proceedings and has experience in them, but that does not seem to me that that is a matter that necessarily supports the application. The question whether a creditor's statutory demand should be set aside requires careful analysis of the applicable legal principles, and the application of those principles to the facts. The role of a solicitor, in acting in such an application, promotes the public interest, so far as it ensures that the Court's resources, which are funded by the community, are applied only to cases which have merit. The significance of that role is emphasised in circumstances where history teaches that matters involving self-represented litigants, or companies represented by their directors, are likely to consume greater publicly funded resources than matters in which a solicitor or legal representative acts for a company. That is a matter of public importance, because there are pressures upon the Court system, in respect of the demand for scarce resources, and by way of delay. An unsuccessful application to set aside a creditor’s statutory demand, brought and conducted without legal representation, also exposes the company – and, in circumstances of potential insolvency, its creditors – to a claim for the costs of the party that issued the demand.

7. It seems to me that the fact that Mr Bobos, and companies associated with him, are repeat litigants in applications to set aside creditor's statutory demands is not a matter which promotes an order dispensing with the grant of leave. Where Mr Bobos, and companies associated with him, have now brought several such applications, then it seems to me that the public policies which are served by the rule have greater and not less application. It seems to me that, in the relevant circumstances, the interests of the community and Boss NSW’s creditors will be promoted if the independent judgment of a solicitor is brought to bear, both on the merits of and scope of the case that is sought to be brought by Boss NSW to set aside the Demand, and in the conduct of the proceedings.

8. For these reasons, I am not persuaded that I should dispense with the usual position which exists under r 7.1 of the Uniform Civil Procedure Rules, so as to permit Mr Bobos to conduct these proceedings for Boss NSW, instead of the representation of that company by a solicitor. In this matter I make the following orders:

1.    Stay the application to set aside the creditor's statutory demand unless and until a notice of appearance is filed by a legal practitioner representing Boss Constructions (NSW) Pty Ltd in the proceedings.

2.    List the matter for further directions in the Corporations Directions List at 10am on 11 February 2019, with a view to dismissal of the application to set aside the creditor's statutory demand if a notice of appearance has not been filed or served by a legal practitioner prior to that listing, or otherwise further directions for the conduct of the proceedings.

3.    The costs of today be reserved.

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Decision last updated: 23 December 2018