Karl Damien v Andrew John Cummins in his capacity as Liquidator of GHIS Pty Ltd ACN 079 830 498 (in liquidation)

Case •

[2017] NSWSC 227

•

17 February 2017

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Karl Damien v Andrew John Cummins in his capacity as Liquidator of GHIS Pty Ltd ACN 079 830 498 (in liquidation) [2017] NSWSC 227
Hearing dates: 17 February 2017
Date of orders: 17 February 2017
Decision date: 17 February 2017
Jurisdiction:Equity - Duty List
Before: Rein J
Decision:

See [10]

Catchwords: CORPORATIONS – whether leave, pursuant to s 500(2) of the Corporations Act 2001 (Cth) should be granted to the plaintiff to proceed against a company in liquidation
Legislation Cited: Corporations Act 2001 (Cth)
Law Reform (Miscellaneous Provisions) Act 1946 (NSW)
Cases Cited: HFPS Pty Limited (Trustee) v Tamaya Resources Limited (In Liq) (No 1) [2016] FCA 442
Re Gordon Grant and Grant Pty Limited [1983] 2 Qd R 314
Vagrand Pty Limited (in liq) v Fielding (1993) 41 FCR 550 at 554-555
Executive Director, Dept of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484
Re Bigdeal Artist Management Pty Ltd (in liq) [2015] NSWSC 936
Category:Principal judgment
Parties: Karl Damien (Plaintiff)
Andrew John Cummins in his capacity as Liquidator of GHIS Pty Ltd ACN 079 830 498 (in liquidation)   (First Defendant)
Brian Raymond Silvia in his capacity as Liquidator of GHIS Pty Ltd ACN 079 830 498 (in liquidation) (Second Defendant)
GHIS PTY LTD (Third Defendant)
Representation: Counsel: Mr H Stitt (Plaintiff)
Mr R Lyne (Defendants)
Solicitors: WKA Legal (Plaintiff)
Polczynski Lawyers (First, Second & Third Defendants)
File Number(s): 2017/46074
Publication restriction: Nil

ex tempore Judgment

  1. In this matter, the plaintiff seeks leave pursuant to s 500 of the Corporations Act 2001 (Cth) (“the Act”) to proceed against the defendant company, which is in liquidation, it having been placed in liquidation some long time ago. The first and second defendants are the liquidators of the company, which is the third defendant, GHIS Pty Limited (which I will refer to as “the company”).

  2. Mr H Stitt of counsel appears for the Plaintiff. Mr R Lyne, solicitor, appears for the defendants.

  3. Section 500 of the Act provides that no civil proceeding is to be proceeded with or commenced against a company in liquidation “except by leave of the court and subject to such terms as the court imposes”.

  4. Mr Stitt has referred me to the case of HFPS Pty Limited (Trustee) v Tamaya Resources Limited (In Liq) (No 1) [2016] FCA 442, a decision of Foster J, in which his Honour made reference to what had been said in Re Gordon Grant and Grant Pty Limited [1983] 2 Qd R 314 at 315-317 per McPherson J. See also Vagrand Pty Limited (in liq) v Fielding (1993) 41 FCR 550 at 554-555 and Executive Director, Dept of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484, per Lee J.

  5. I draw from these cases that the matters to which the Court will have regard are:

  1. Whether the applicant can demonstrate, on the balance of convenience, that it is justified in bringing the proceedings as opposed to the ordinary procedure of lodging a proof of debt.

  2. Whether there is a serious or substantial question to be tried.

  3. The amount and significance of the claim and whether it is a genuine claim and not futile.

  4. The degree of complexity of the legal and factual issues involved.

  5. The stage to which the proceedings, if already commenced, are progressed.

  6. The expense or inconvenience placed on the corporation.

  7. Whether there is opposition to leave being granted.

  8. Whether the applicant is likely to recover any moneys owed to it without the grant of leave.

  9. Whether the company in liquidation will become subject to a multiplicity of expensive and unnecessary actions.

  1. Mr Stitt also drew my attention to a decision of Black J in Re Bigdeal Artist Management Pty Ltd (in liq) [2015] NSWSC 936, where his Honour, in granting leave, gave consideration to whether or not a serious dispute had arisen and, hence, whether there was a serious question to be tried, citing Vagrand.

  2. The claim of the plaintiff against the company is, in essence, that he sought from the broker its assistance in obtaining a policy that would give the plaintiff, run-off cover in relation to his occupation as a mortgage broker. The company obtained cover and the plaintiff paid approximately $20,000 for that cover. As it turned out on the plaintiff’s case, the company had organised a form of insurance, which was not run-off cover at all, with the result that when claims were made against the plaintiff subsequently, the insurer in question refused cover, and the plaintiff was left to deal with those claims by himself at a cost, he says, of approximately half a million dollars, which was more or less half for defending the claims and half for settling the claims.

  3. I am satisfied that:

  1. The claim of the plaintiff is not one suitable for a proof of debt because it is a claim against the company and not a debt. The question of complexity and the prospect of recovery without leave being granted do not really arise.

  2. It is a one off claim.

  3. Because the company itself has a professional liability policy if the plaintiff succeeds against the company s 562 of the Act will apply to corral, as it were, the proceeds of the insurance policy for the benefit of the plaintiff, without impinging therefore on the other funds available to the general body of creditors.

  4. There is a serious and substantial question to be tried.

  5. The amount in question is significant, and the claim appears to be a genuine one and not futile.

  1. I note that Mr Lyne, on behalf of the defendants, indicated his client’s position is neither to consent nor to object to the application. No suggestion was made that the plaintiff could or should use another means to arrive at a claim against the insurer, for example by virtue of s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

  2. I am therefore satisfied that the conditions for leave to be granted under s 500 are met and, accordingly, pursuant to s 500, I grant leave to the plaintiff to proceed against the company.

  3. I note that Mr Stitt has informed me that his client does not seek an order for costs in relation to the motion, and accordingly there will be no order as to costs.

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Decision last updated: 10 March 2017

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