Lesso Building Material Trading (Sydney) Pty Ltd v PSM Stone Pty Ltd

[2019] NSWSC 1008

Supreme Court

New South Wales

Medium Neutral Citation:	Lesso Building Material Trading (Sydney) Pty Ltd v PSM Stone Pty Ltd [2019] NSWSC 1008
Hearing dates:	5 August 2019
Decision date:	05 August 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1. The Plaintiff be given leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to proceed with the Amended Notice of Motion filed on 27 June 2019 against the First and Third Cross-Claimants. 2. Pursuant to r 13.4 or alternatively r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) the Cross-Claim filed by the Cross-Claimants in these proceedings on 17 April 2019 be struck out. 3.   The costs of this application be the Plaintiff’s costs in the cause. 4.   Remit the matter to the Registrar in the Common Law Division for directions on 14 August 2019.
Catchwords:	CIVIL PROCEDURE — Summary disposal — Dismissal of proceedings - application to proceed with a notice of motion in absence of a cross-claimant - application for summary disposal of a cross-claim
Legislation Cited:	Corporations Act 2001 (Cth), ss 439A, 444D, 500(2) Uniform Civil Procedure Rules 2005 (NSW), rr 13.4, 14.28
Cases Cited:	General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69
Category:	Principal judgment
Parties:	Lesso Building Material Trading (Sydney) Pty Ltd PSM Stone Pty Ltd
Representation:	Counsel: Mr Harris (Plaintiff) Mr P Jakimov (First Cross-Claimant)   Solicitors: Colin Biggers & Paisley Lawyers (Plaintiff) Fortis Law Group (First Cross-Claimant)
File Number(s):	2019/00054162
Publication restriction:	Nil

Judgment

1. HER HONOUR: This is an application that has been referred to me by the registrar to deal with in the Corporations List. It is an application by the plaintiff for leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) (Corporations Act) to proceed with a notice of motion filed against the first and third cross-claimants. Filed in court on 27 June 2019 is an amended notice of motion on which the plaintiff now moves. The plaintiff also seeks an order pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), or alternatively pursuant to r 14.28 of the UCPR, that the cross-claim filed by the cross-claimants in these proceedings on 17 April 2019 be dismissed or, in the alternative, be struck out.

2. The first and third cross-claimants (PDM Stone Pty Limited and PDM Group Holdings Pty Ltd respectively) consent to the grant of that relief. The position of the second cross-claimant (Ali Baygan) is not known. There has been no appearance on this application by the second cross-claimant.

3. Exhibit B comprises copies of communications by the plaintiff's solicitor and by the first defendant's solicitor, by email to the second cross-claimant, respectively, notifying him of the orders that had been made in the proceedings at that stage and of the listing of the matter before the Corporations Registrar today. I am informed that, to the best of the plaintiff's knowledge, the second cross-claimant is no longer resident in Australia and is in Iran.

4. I am satisfied that all reasonable steps have been taken to notify the second cross-claimant of the proceeding today, and that it is appropriate to proceed notwithstanding the absence of the second cross-claimant.

5. On the application for relief, the plaintiff has read two affidavits sworn by its solicitor, Peter John Harkin. In those affidavits, the background to the dispute is broadly outlined. The plaintiff company was incorporated on 21 July 2016 and was established for the purposes of a joint venture between two entities (one of which was Lesso Moore (Australia) Holdings Pty Ltd (Lesso Moore)). At a meeting of the board of directors of the plaintiff on 25 May 2018 it was resolved, among other things, that the plaintiff company was insolvent and that voluntary administrators should be appointed to the company. Two of the partners of BRI Ferrier were appointed as the joint and several voluntary administrators of the company.

6. On 22 June 2018, the administrators convened a second meeting of creditors in accordance with s 439A of the Corporations Act. That meeting took place on 2 July 2018. At that meeting the creditors resolved that the company execute a deed of company arrangement and creditors’ trust deed. A copy of the deed of company arrangement is exhibited to Mr Harkins’s 14 May 2019 affidavit.

7. The deed of company arrangement (DOCA) was executed on 4 July 2018 by the company, the administrators and the other joint venture party, Lesso Moore. The creditors’ trust deed was executed on the same day by the company; by the two persons appointed capacity as joint and several deed administrators of the deed of company arrangement both in that capacity and in their capacity as trustees of the creditors’ trust; and by Lesso Moore.

8. Reference is made by the plaintiff to particular provisions of DOCA, in particular, cl 7.3 of the DOCA which provides that, immediately upon and with effect from completion, and subject to cl 7.6, the claims of all creditors will be fully released and discharged; and to cl 7.5 of the DOCA which provides that, subject to s 444D of the Corporations Act, the deed may be pleaded by the deed company or the deed administrators against any creditor as an absolute bar and defence to any claim to the extent that the deed company’s liability has been released and discharged in relation to that claim pursuant to cl 7.3.

9. There is no dispute that the relevant cross-claimant (the second cross-claimant, who is the second defendant in the proceedings) falls within the definition of creditor in that deed. I have been taken through the relevant parts of the statement of cross-claim, from which it is apparent that all of the claims sought to be brought by the cross-claimants (and, relevantly, by the second cross-claimant) are claims in relation to conduct which took place prior to the DOCA.

10. The particulars to [22] of the cross-claim do refer to the execution of a document in early 2019, which is after the date of the DOCA, but that would appear to be a typographical error and, in any event, the entry into the agreement is pleaded as having occurred at an earlier stage (that being a licence agreement of premises for a term commencing on 1 September 2016). There is evidence that the DOCA has been wholly effectuated (see the notice at CB 88).

11. Accordingly, on the evidence before me, it is clear that all of the claims sought to be made by way of cross-claim by the second cross-claimant are claims that have been released or discharged pursuant to the DOCA and in respect of which the deed company and the administrators would be entitled to plead the deed in bar.

12. It is noted that, insofar as [43] of the cross-claim refers to a variation allegedly without the consent or authority of the second cross-claimant of the guarantee and indemnity (which it is there alleged discharged the second cross-claimant from liability pursuant to the guarantee) this is not strictly a matter of a pleading of any cross-claim but is a matter that in any event is relied upon in the defence to the statement of claim (see [5] of the defence).

13. I am satisfied, having regard to the high threshold to be met for the summary disposal of claims pursuant to rr 13.4 or 14.28 of the UCPR (see General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69) , that this is an appropriate case in which summarily to dismiss the cross-claim. I am satisfied there is no tenable argument for maintenance of the cross-claim in light of the provisions of the DOCA and the fact that the DOCA has been wholly effectuated; and in those circumstances the maintenance of the proceedings on the cross-claim would be an abuse of process.

14. For those reasons, I make the following orders:

1. The Plaintiff be given leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) to proceed with the Amended Notice of Motion filed on 27 June 2019 against the First and Third Cross-Claimants.

2. Pursuant to r 13.4 or alternatively r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) the Cross-Claim filed by the Cross-Claimants in these proceedings on 17 April 2019 be struck out.

3. The costs of this application be the Plaintiff’s costs in the cause.

4. Remit the matter to the Registrar in the Common Law Division for directions on 14 August 2019.

**********

Decision last updated: 09 August 2019