Murphy v Love

[2006] FCA 444

FEDERAL COURT OF AUSTRALIA

Murphy v Love [2006] FCA 444

PRACTICE & PROCEDURE – summary dismissal of proceeding under Federal Court Rules O 20 r 2 – whether reasonable cause of action – whether abuse of process of the Court – proceeding dismissed. 

Bowen v Stratigraphic Explorations Pty Ltd [1971] WAR 119 referred to
Lonrho Plc v Al-Fayed (No 2) [1992] 1WLR 5 referred to
Seven Network Ltd v News Ltd (No 4) (2005) 214 ALR 686 referred to
Dey v Victorian Railways Commissioners (1949) 78 CLR 62 referred to
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 referred to

MICHAEL JOHN MURPHY v ANDREW JOHN LOVE, GARRY JOHN TREVOR and DARREN GORDON WEAVER as Joint and Several Administrators of Sons of Gwalia Ltd and Others (Subject to Deed of Company Arrangement)

WAD 1 of 2006

LEE J
26 APRIL 2006
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 1 OF 2006

In the matter of Sons of Gwalia
Limited (ACN 008 994 287) and Others
(Subject to Deed of Company Arrangement)

BETWEEN:	MICHAEL JOHN MURPHY Plaintiff
AND:	ANDREW JOHN LOVE, GARRY JOHN TREVOR and DARREN GORDON WEAVER as Joint and Several Administrators of Sons of Gwalia Ltd and Others (Subject to Deed of Company Arrangement) Defendants
JUDGE:	LEE J
DATE OF ORDER:	26 APRIL 2006
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.        The proceeding be dismissed.

2.        The plaintiff pay the defendants’ costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 1 OF 2006

In the matter of Sons of Gwalia
Limited (ACN 008 994 287) and Others
(Subject to Deed of Company Arrangement)

BETWEEN:	MICHAEL JOHN MURPHY Plaintiff
AND:	ANDREW JOHN LOVE, GARRY JOHN TREVOR and DARREN GORDON WEAVER as Joint and Several Administrators of Sons of Gwalia Ltd and Others (Subject to Deed of Company Arrangement) Defendants

JUDGE:	LEE J
DATE:	26 APRIL 2006
PLACE:	PERTH

REASONS FOR JUDGMENT

1. This is an application brought by the defendants pursuant to O 20 r 2 of the Federal Court Rules for an order that the proceeding commenced against them by the plaintiff be summarily dismissed.  The parties have filed written submissions and have agreed that the motion be decided on those submissions. 

2. Order 20 rule 2 provides that where it appears to the Court in any proceeding that (a) no reasonable cause of action is disclosed; (b) the proceeding is frivolous or vexatious; or (c) the proceeding is an abuse of the process of the Court, the Court may dismiss the proceeding.

3. On 3 January 2006 the plaintiff purported to commence a proceeding under the Corporations Act 2001 (Cth) (“the Act”) against Weaver as “Joint and Several Administrator of Sons of Gwalia and certain subsidiaries”. In the title to the application it was recited the plaintiff acted in a representative capacity “for and on behalf of the constituents of The Murphy Interest ABN 39 734 598 213”.

4. An appearance as defendants to the application was filed by Weaver and the two other joint and several Administrators appointed under a Deed of Company Arrangement for Sons of Gwalia Ltd and 24 associated companies. 

5. Although the application stated that a statement of claim accompanied it, no statement of claim was filed and the plaintiff relied instead upon an affidavit in which the plaintiff purported to outline the basis on which the matter was said to engage the jurisdiction of the Court.  In that affidavit the plaintiff claimed, in effect, that a proof of debt lodged by the plaintiff with the defendants as a claim for payment under the Deed of Company Arrangement had been wrongly disallowed by the defendants. 

6. In the affidavit the plaintiff stated that he was the “Administrator for The Murphy Interest (formerly Diespa Nominees Pty Limited (deregistered) and The A-M Family Trust (now vested)”. 

7. It is unnecessary at this point to determine whether the plaintiff had standing to bring a proceeding in the manner asserted. “The Murphy Interest” appears to be no more than a descriptive title. Diespa Nominees Pty Ltd (“Diespa”) remains a deregistered company. Pursuant to s 601AD of the Act upon deregistration Diespa ceased to exist and all property of the company vested in the Australian Securities and Investment Commission (“ASIC”). It appears that no application has been made under s 601AH of the Act to obtain an order that ASIC reinstate the registration of Diespa.

8. It was said that the claimed indebtedness to “The Murphy Interest” of the companies under administration “arose from commission of organised crime as from 1993 on the constituents of The Murphy Interest - said organised crime was assisted as to commission by identified Western Australia Public Officers with protection of relevant senior Western Australia Public Officers continuing through present date”. 

9. It appears from further material and submissions filed on behalf of the plaintiff that in or about 1991, when Diespa was a registered corporation and the plaintiff was involved in the management thereof, Diespa acquired a mining lease from a third party, later transferring a one-half share in the lease to TZ Mining Pty Ltd (“TZ”).  The plaintiff asserts that between 1991 and 1993, by means of alleged sharp practices engaged in by other parties, Diespa and TZ were deceived and suffered loss in relation to their further dealings in respect of the lease. 

10. In 1993 Diespa and TZ commenced proceedings in this Court against parties the subject of those allegations.  In July 1994 the parties to that litigation executed a Deed of Settlement, replaced by a further Deed in September 1994, which settled the differences between the parties and terminated the proceeding in this Court. 

11. In March 1995, Sons of Gwalia Ltd and a subsidiary, being persons unconnected with the foregoing proceeding, acquired all of the shares in one of the former respondents to that litigation and thereby acquired proprietorship of the mining lease referred to above.  In October 1995 Diespa was deregistered.  In June and August 2005 Sons of Gwalia transferred the lease and associated property to another purchaser. 

12. The defendants have filed an affidavit in which it is deposed that having considered all of the foregoing information put before them by the plaintiff it was obvious that neither Sons of Gwalia Ltd nor its subsidiary had any indebtedness to the plaintiff and that the defendants had a duty to disallow the proof of debt lodged. 

13. The plaintiff has adduced no material to dispute that contention and has made no submission to the effect that the defendants failed to duly exercise their powers as Administrators in disallowing the plaintiff’s proof of debt. 

14. The plaintiff’s claim in this proceeding appears to concede that the Deed of Settlement executed in September 1994 bars any action on behalf of Diespa.  The plaintiff, therefore, purports to seek a further order that the Deed of Settlement be set aside.  The grounds upon which the plaintiff foreshadows reliance for making such an application to set aside the Deed of Settlement do not allege fraud on the part of a party to the Deed.  It appears that instead it would be alleged that the Deed was executed by Diespa under the duress of solicitors instructed by Diespa.  

15. No party to the Deed of Settlement is a party to the proceeding.  More particularly it is not asserted that Sons of Gwalia Ltd acquired its interest in the mining lease and associated property other than as a ‘bona fide’ purchaser for value without notice.  Apart from the insurmountable difficulties that would usually face a party attempting to have a Deed of Settlement set aside it is obvious that this proceeding against the defendants has no prospect of success seeking as it does an order against the defendants in respect of their rejection of the proof of debt lodged by the plaintiff.  (See: Bowen v Stratigraphic Explorations Pty Ltd [1971] WAR 119, 121).

16. It may be accepted that an application for summary dismissal of a proceeding will rarely succeed if the application is based on no more than the apparent lack of probability that the claimant will succeed or if the application to dismiss does not address whether there are latent substantive questions that may arise in the course of the proceeding. (See: Lonrho Plc v Al-Fayed (No 2) [1992] 1WLR 5; Seven Network Ltd v News Ltd (No 4) (2005) 214 ALR 686). However, this proceeding is one of those cases where it is obvious that there is no utility in allowing the matter to continue. On its face there is no question that can be competently raised by the plaintiff for resolution by the Court in respect of the conduct of the defendants as Administrators. (See: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 per Dixon J at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 per Barwick CJ at 129).

17. It is unnecessary to address the question of unexplained delay nor of apparent expiration of periods of limitation that would be live issues if a proceeding to set aside the Deed of Settlement were to be commenced by a party to that Deed against other parties thereto.

18. It is apparent that no reasonable cause of action has been disclosed by the plaintiff in this proceeding and further that to allow the proceeding to continue would constitute an abuse of process of the Court. 

19. The proceeding must be dismissed with costs.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Associate:

Dated:             26 April 2006

The Plaintiff appeared in person:
Counsel for the Respondent:	K de Kerloy
Solicitors for the Respondent:	Freehills
Date of filing of submissions:	28, 29, 30 March 2006
Date of Judgment:	26 April 2006