AUTOWD PTY LTD -v- CARLINS AUTOMOTIVE AUCTIONEERS (WA) PTY LTD [2025] WASC 533 | Case summary

Supreme Court of WA|2025-12-15|Before: Musikanth J

By chamber summons filed on 1 October 2025, the defendant (and plaintiff by counterclaim) (Carlins) seeks leave to proceed with its counterclaim against the plaintiff (defendant by counterclaim) (AutoWD), being a company in liquidation (application).
The application arises in circumstances where Carlins first filed its defence and counterclaim in these proceedings on 28 March 2022. In its defence and counterclaim, Carlins among other things alleges that AutoWD did not pay for more than 35 vehicles allegedly purchased from Carlins between 17 March 2021 and 2 June 2021 or the transport fees associated with those purchases.
On 15 April 2025, some three years after the counterclaim was filed, the court was advised by email that AutoWD had been placed into voluntary administration four days earlier and the counterclaim was thus stayed by force of s 440D of the Corporations Act 2001 (Cth) (Act).
Following conferral, AutoWD advised the court that it did not consent to the grant of leave though did not wish to be heard on Carlins's application.

Section 500(2) of the Act provides that after the passing of a resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except with leave of the court and subject to such terms as the court imposes.
The principles relevant to an application made under s 500(2) were outlined by Beech J in Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334 [4] - [15], and re-iterated by his Honour in Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [8] - [14], following a survey of the authorities.
Gratefully drawing on his Honour's analysis, those principles may be summarised as follows:

(1) Part of the purpose of the requirement for leave is to avoid a company in liquidation being subject to a multiplicity of time consuming and expensive actions.

(2) The discretion to grant or refuse leave is broad. It is not possible or appropriate to attempt to state exhaustively the relevant considerations. Among the relevant considerations are the amount, seriousness and nature of the claim, the degree of complexity and legal factual issues, and the stage the proceedings has reached.

(3) It has often been said that there must be no prejudice to the creditors, or to the orderly winding up of the company, before the action is allowed to proceed.

(4) The court should not grant leave to proceed or to commence proceedings against a company in liquidation if it appears there is no possibility that the company will be able to meet any amount of damages awarded against it. The court should not give its imprimatur to fruitless proceedings which would involve a waste of time and money.

(5) There would be a good reason to refuse leave when there is no prospect of surplus assets in the company and no question of insurance.

(6) The position is different if there is an insurer standing behind the company in liquidation that will pay the amount of any judgment awarded. That has been said to be a factor strongly favouring the grant of leave, as in those circumstances, the grant of leave will generally not prejudice creditors.

(7) A claimant seeking leave need only demonstrate a serious question to be tried.[2]

As his Honour also noted, the same principles that govern the grant of leave under s 500(2) of the Act also govern the grant of leave under s 471B.[3]

Having regard to all the circumstances, I consider leave ought to be granted to Carlins to proceed with its counterclaim.
I say this for at least the following reasons.
First, the counterclaim on its face raises serious questions to be tried. Indeed, many of the allegations in the counterclaim are admitted.
Secondly, it would seem unlikely that continued prosecution of the counterclaim would materially delay, any further, the winding up of AutoWD.
In this connection, the hearing of the counterclaim would more than likely occur at the same time as the hearing of AutoWD's substantive claims. With many of the allegations in the counterclaim already admitted, it would also seem to me unlikely that the time required for preparation for hearing of the counterclaim would be significant.
Thirdly, although the counterclaim may be accommodated through the proof of debt regime, as it is essentially a claim for damages[4] it is interlinked with Carlins's defence to AutoWD's claim.
Carlins has in any event confirmed that the proof of debt it lodged on 23 April 2025 will be withdrawn should it be granted leave to proceed with its counterclaim.
Finally, and significantly, AutoWD has neither identified any particular prejudice which may arise should leave be granted nor filed any materials in opposition to the application.

For the foregoing reasons, I make the following orders:

(1) The defendant be granted leave to proceed with its counterclaim against the plaintiff, in these proceedings, pursuant to s 500(2) of the Corporations Act 2001 (Cth).

(2) The time for compliance with Order 8 of the Orders of the Honourable Justice Musikanth made on 18 October 2024 (the Defendant to file and serve any Amended Defence and Counterclaim) be extended to the date that is 14 days after the date of this order.

(3) The time for compliance with Order 9 of the Orders of the Honourable Justice Musikanth made on 18 October 2024 (the Plaintiff to file and serve any Amended Reply and Defence to Counterclaim) be extended to the date that is 28 days after the date of this order.

(4) The proceedings be listed for further directions on a date to be fixed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Cf. Hall v Kwik Transport & Crane Hire Pty Ltd (in liq) [2023] WASC 465 [7] - [8].

[2] Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [8] - [14] (citations omitted).

[3] Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408 [7].

[4] See Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd [2022] FCA 167 [25(g) - (h)].

AUTOWD PTY LTD -v- CARLINS AUTOMOTIVE AUCTIONEERS (WA) PTY LTD [2025] WASC 533 (15 December 2025)

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