Baird v ACN 079 121 136 Pty Ltd

JUDGE: GORDON J DATE OF ORDER: 31 MAY 2013 WHERE MADE: MELBOURNE

1. Pursuant to s 500(2) of the Corporations Act 2001 (Cth), the applicants have leave to continue these proceedings against the respondent, such leave being limited to the applicants' and respondent's preparation for, and attendance at, the mediation described in paragraph 2 of these orders.
2. Pursuant to Rule 28.02 of the Federal Court Rules 2011, the proceeding be referred to mediation by a Registrar of the Court, to be conducted no later than 31 July 2013. The mediator is to report the result of the mediation to the Court by 2 August 2013.
3. The further hearing of the applicants' interlocutory process dated 6 May 2013 be adjourned to 9 August 2013 at 9:30am.
4. Costs reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 985 of 2010

BETWEEN: JANICE BAIRD First Applicant WILLIAM CHARLES BENNETT Second Applicant JANICE IRENE BENNETT Third Applicant FREDERICK BURDELL Fourth Applicant DAWN DRANE BURDELL Fifth Applicant OLGA MARIA CASTINO Sixth Applicant CARLO GUISEPPE CASTINO Seventh Applicant PETER ANTHONY COLLEY Eighth Applicant JUDITH ANNE COLLEY Ninth Applicant BERNARD LOUIS DE CHERMONT Tenth Applicant CATHERINE MARIE JEANNE DE CHERMONT Eleventh Applicant PATRICK JOHN HASTIE Twelfth Applicant CATHERINE ELIZABETH HERRIOTT Thirteenth Applicant PETER RAYMOND HIGGINS Fourteenth Applicant SHANE JARRETT Fifteenth Applicant MARCELLE JARRETT Sixteenth Applicant BRYAN DESMOND JONES Seventeenth Applicant VICKY JONES Eighteenth Applicant COLIN RAYMOND KIRKMAN Nineteenth Applicant ESTELLE MARGARET KIRKMAN Twentieth Applicant BRYAN LOBEGEIGER Twenty-First Applicant FRANCES LOBEGEIGER Twenty-Second Applicant JOHN WINSTON MAY Twenty-Third Applicant MARILYN MARGARET MAY Twenty-Fourth Applicant LEWIS FRANCIS MULLER Twenty-Fifth Applicant LORRAINE ROBYN MULLER Twenty-Sixth Applicant GEOFFREY WINSTON PETERS Twenty-Seventh Applicant JEANNETTE IVY PETERS Twenty-Eighth Applicant STEVE PLOZZA Twenty-Ninth Applicant LORELLA PLOZZA Thirtieth Applicant ROSA LA ROSA Thirty-First Applicant STELLA CONSTANCE RUSSO Thirty-Second Applicant GREGORY JAMES SIMPSON Thirty-Third Applicant KRISTINE MELINA SIMPSON Thirty-Fourth Applicant KENNETH SPAIN Thirty-Fifth Applicant IRENE SPAIN Thirty-Sixth Applicant WILLIAM CHARLES STEVENSON Thirty-Seventh Applicant PENNY ANN STEVENSON Thirty-Eighth Applicant GARY DAVID WILDMAN Thirty-Ninth Applicant VILMA WILDMAN Fortieth Applicant ROBERT WILLIAM WYATT Forty-First Applicant GRACE FLORENCE WYATT

JUDGE: GORDON J DATE: 31 May 2013 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 By an interlocutory application dated 6 May 2013, the applicants seek leave to continue these proceedings against the respondent under s 500(2) of the Corporations Act 2001 (Cth) (the Act). For the reasons that follow, I would grant that leave on specific terms. 2 This proceeding was filed in 2010. The respondent is insured and the claim subrogated to the insurers. 3 A mediation was to be held by the end of November 2012. That mediation was not held for two reasons; the applicants were completing loss and damage calculations and, no less importantly, on 4 October 2012, the applicants were informed that the respondent had been placed in liquidation as a result of a creditors' voluntary winding up. The liquidation stayed these proceedings: s 500(2) of the Act. 4 The unusual feature of this application is that the respondent was wound up on 6 September 2011. That fact was not brought to the attention of the solicitors for the applicants or even the solicitors for the respondent (the insurer) until about October 2012. The applicants' solicitors had difficulty contacting the liquidators. One of them had died. Despite the remaining liquidator being aware of the claim, the applicants' solicitors were unable to discover the reason or reasons why they were not informed of the respondent being wound up. 5 On 4 February 2013, the respondent's solicitors provided the applicants' solicitors with a copy of an insurance policy. Those solicitors also confirmed that they continued to act for the respondent and its insurers in these proceedings. What remains in doubt is the extent to which the policy provides (or limits) recovery by the applicants for the claims they make in the proceeding. Significantly, the application is neither consented to nor opposed by the respondent. 6 The principles relevant to an application for leave under s 500(2) are well established: see Altinova Nominees Pty Ltd v Leveraged Capital Pty Ltd (Receivers and Managers Appointed) (in liquidation) (No 2) [2009] FCA 42 at [17]-[23]; Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liquidation) [2010] FCA 597 at [16] and Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356 at [18]-[24]. 7 As Foster J said in Eopply: 22 In Executive Director of the Department of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484, Lee J discussed the relevant considerations which should ordinarily guide the exercise of the discretion to grant leave to proceed against a corporation in liquidation. The following considerations may be extracted from his Honour's judgment: (a) The purpose of having a requirement for leave is to prevent a corporation in liquidation being subjected to actions that are expensive and, therefore, carried on at the expense of the creditors of the company and, perhaps, unnecessarily. (b) In determining whether leave should be granted, the Court considers whether the balance of convenience lies in allowing the applicant to proceed by way of action to judgment, or whether the applicant should be left to pursue his or her claim by lodging a proof of debt with the liquidator. The matter is one of discretion and the onus is on the applicant to demonstrate why it is more appropriate in respect of the particular claim, to proceed by way of action. (c) For leave to be granted, it must be shown that there is a serious or substantial question to be tried and a real dispute between the parties. Leave will not be granted where the applicant does not have a genuine claim or where the claim would be futile. 8 Here, the considerations that point to the grant of leave are: 1. the claim raises a substantial question to be tried and there is a real dispute between the parties; 2. although the liquidator informed the applicants' solicitors that the respondent has no assets and therefore the claim is said to be futile, the claim is in fact against an insurer and being defended by the insurer; and 3. there is no opposition to leave being granted. 9 There is no consideration of any significance which would tend against the grant of leave. However, the one issue which remains is that noted earlier - the extent to which the policy provides (or limits) recovery by the applicants for the claims they make in this proceeding. As the affidavit filed by the applicants' solicitor stated, he had not been given any information about the extent the policy limited recovery by his clients. For example, claims may have exhausted already the extent of the policy. 10 For these reasons, I would grant leave to the applicants to proceed against the respondent in respect of the claims which it has made in this proceeding pursuant to s 500(2) of the Act. However, the grant of leave would be on terms: s 500(2). The initial grant of leave is limited to preparation for, and attendance at, a mediation before a Registrar of the Court by no later than 31 July 2013. Secondly, the application for leave under s 500(2) will be adjourned to 9 August 2013. That will provide the applicants' solicitors with an opportunity to renew the application for leave if that becomes necessary. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.