Jonas v Rocklea Spinning Mills Pty Limited

[2000] VSC 93

SUPREME COURT OF VICTORIA
COMMERCIAL AND EQUITY DIVISION	Not Restricted

CORPORATIONS LIST

No. 6556 of 1999

In the Matter of MGT Samorr Knitting Pty Ltd (In liquidation) (ACN 004 907 868)

TIM JONAS (as liquidator of MAT SAMORR UNITY MILLS PTY LTD) (In liquidation) (ACN 004 907 868)	Plaintiff
v
ROCKLEA SPINNING MILLS PTY LTD (ACN 000 070 824)	Defendant

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 March 2000
DATE OF JUDGMENT:	10 March 2000
CASE MAY BE CITED AS:	Jonas v Rocklea Spinning Mills Pty Ltd
MEDIUM NEUTRAL CITATION:	[2000] VSC 93

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Corporations – application for security for costs where liquidator is named plaintiff under s.588FF Corporations Law – whether corporation is plaintiff for the purposes of s. 1335 Corporations Law.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	J. Elliott	Madgwicks
For the Defendant	M. Clarke	John Matthies & Co

HIS HONOUR:

1. The applicant is suing as liquidator of a company in liquidation and claims against the respondent an order pursuant to s.588FF of the Corporations Law. The proceeding originally commenced in the Federal Court but upon transfer to this court was initiated by Notice of Motion dated 19 August 1999.

1. Paragraph 2 of that notice seeks the order under s.588FF of the Corporations Law. Then by summons dated 17 December 1999 the respondent, or defendant as he is referred to in the summons (it will be convenient to refer to them as plaintiff and defendant) - the defendant sought security for costs against the plaintiff liquidator pursuant to rule 62.02(1)(b) of the Supreme Court Rules alternatively s.1335 of the Corporations Law.

1. The application for security of costs was heard by Master Evans who on 23 February this year dismissed the application and recorded in "Other Matters" as his reasons that the application under the Rules was dismissed because there was no evidence that the liquidator would be personally unable to meet any order for costs made against him in this personally and that the application under s.1335 of the Corporations Law was dismissed because this was not a proceeding brought by a corporation. An appeal is now brought from the Master's order.

1. As far as the provisions of the Rules are concerned, in my opinion the plaintiff is not a corporation within the meaning of rule 62.02 (1)(b) but is the liquidator. As such he would fall within that provision of the Rules as a person suing not for his own benefit but for the benefit of some other person, I would have thought, but it is not necessary to decide that aspect because there is no evidence that there is reason to believe that the liquidator has insufficient assets of his own in Victoria to pay the costs of the defendant if ordered to do so.

1. The conclusion that the plaintiff is not a corporation depends I think upon a proper interpretation of s.588FF of the Corporations Law which authorises this proceeding and that section provides for an application of "a company's liquidator". It seems to me that it necessarily follows from that provision that it is not the company but it is the liquidator who makes the application and is accordingly the applicant or the plaintiff in such a proceeding. I have no doubt that the court has jurisdiction to make an order personally against the liquidator if the liquidator fails in such an application. My understanding of the practice would be that if a liquidator failed in such an application the costs would normally follow the event and an order would be made against the only person who appeared on the record. It is not my understanding that it is the practice in such a case for the court to make an order that the costs of a successful defendant be paid out of the assets of the company although no doubt the court has jurisdiction to make such an order if it saw fit, but it is not, as I understand it, the usual practice. I am certainly not aware of any rule that protects a liquidator from an order for costs and in that regard I think that what was said by Mr Justice Romer in Re W. Powell & Sons, [1896] 1 Ch. 681 is applicable in this State and under these provisions.

1. Turning to s.1335 of the Corporations Law, I do not think that provision applies for the reasons that I have already indicated. That section applies to a case where a corporation is plaintiff and in my opinion the corporation is not the plaintiff in this proceeding. I recognise that the contrary view has been judicially expressed. In Star v NAB [1999] NSWSC 353, an unreported decision of Mr Justice Rolfe, the contrary view was I think expressed (at page 3 of the copy of the unreported judgment which has been supplied to me).

1. I would respectfully disagree with the conclusion which was reached in that case, that a corporation should be treated as being the real plaintiff for the purposes of s.1335, notwithstanding that the proceedings are brought by the liquidator in his name. I think that the correct position is stated by Meagher JA in Hession v Century 21 South Pacific Ltd [1992] 28 NSWLR 120. At page 123, Meagher JA said that a distinction must be made between cases in which the liquidator personally is the plaintiff and those when the company albeit by its agent the liquidator is the plaintiff. I understand that distinction when applied to the present case to have the effect that this is a case in the former category, namely one in which the liquidator personally is the plaintiff and not a case in the latter category which would be one in which the company was the plaintiff, albeit by its agent: in the sense that the liquidator was controlling the proceedings, giving the instructions and generally acting on behalf of the company (which was the named plaintiff) in the conduct of the litigation.

1. That is the way I understand the distinction which is being made in that case should be applied. The example therein given of the misfeasance summons I think supports that analysis. I do not see a difference (in terms of who is the real plaintiff) between a misfeasance summons and a proceeding under s.588FF. Meagher JA goes on to say: "Where the company in liquidation is the plaintiff, things are otherwise. In this case, obviously the Court has jurisdiction to order security for costs: that is what s.1335 says."

1. I think those words mean what they say but it cannot be said in this case that the company in liquidation is the plaintiff.  For those reasons the appeal is dismissed. 

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