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[2004] FCA 236
Federal Court of Australia
2004-03-05
Beaumont J
Original judgment source is linked above.
Introduction 1 Before the Court is a notice of motion, dated 23 February 2004, seeking orders for the striking out of an amended statement of claim filed in these proceedings, or, in the alternative, for orders staying the proceedings; and, finally, for an order that judgment be entered in the proceedings for the respondents (who are the applicants on this notice of motion). A preliminary point has arisen for consideration before other questions arise of the notice of motion (those other questions being principally of a pleading character). 2 The preliminary point arises in the following fashion. The first applicant (who is the first respondent on this notice of motion), as the application states, is a company in liquidation; it is a company which is being wound up in insolvency. It is common ground that s 471A of the Corporations Act 2001 (Cth) applies in the present proceedings. 3 Relevantly, s 471A provides: '(1) While a company is being wound up in insolvency or by the Court, a person cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company. (1A) Subsection (1) does not apply to the extent that the performance or exercise, or purported performance or exercise, is: (a) as a liquidator appointed for the purposes of the winding up; or (b) as an administrator appointed for the purposes of an administration of the company beginning after the winding up order was made; or (c) with the liquidator's written approval; or (d) with the approval of the Court.' (Emphasis added.) 4 By letter dated 25 September 2002, the solicitors for the second and third applicant wrote to Antony de Vries, the liquidator of the first applicant, a letter in the following terms: 'We advise that we act on behalf of Tony and Joanne Messina, formerly directors of TCB Concreters with respect to which company we understand you are the administrators. We have given advice to our clients as to a possible cause of action arising out of the Building Industry Royal Commission against the CFMEU [Construction Forestry Mining and Energy Union] and certain members of that organisation. The claim would, broadly, bebased on statutory and common law counts relating to the CFMEU's interference with our clients' business activities such that contracts were placed in jeopardy, work could not be completed on at least one project, and projects which were "in the pipeline" were no longer on offer to our clients or their company. The damages which we would be claiming would be significant - in excess of $1,000,000. Just one contract on which our clients were no longer welcome to tender for was for approximately $1.25 million. It would assist and complete our clients' case if an action were also brought on behalf of the company as it has clearly also suffered financial loss due to the actions of the CFMEU. Would you please advise whether you would be prepared to give your consent to us taking such action on behalf of TCB, and advise us of any conditions which you would place upon your consent. The action we are contemplating is to be taken in the Federal Court of Australia. We advise that, whether or not you consent, Mr. or Mrs. Messina will be contacting you with a view to uplifting copies of documents from your office to assist us in their proceedings. Please also advise us as to the probable shortfall, if any, in the company funds.' 5 The liquidator responded by letter dated 17 December 2002 as follows: '1 refer to the above Company and to your letter dated 13 December 2002 in respect to your clients, Mr. Tony and Mrs. Joanne Messina's possible cause of action arising out of the Building Industry Royal Commission against the CFMEU. Consent is given to your clients to proceed in your proposed action on behalf of the Company. Mrs. Messina has already been in contact with this office and has uplifted relevant documentation to assist you in your proposed proceedings. I attach a schedule that summarises the Company's financial details, as detailed in the Report as to Affairs submitted to this administration by the Company's directors, at the date of my appointment as Liquidator (18 October 2000).' (Emphasis added.) 6 By their application, dated 18 September 2003 and filed on 1 October 2003, the applicants applied to this Court for damages and declarations pursuant to ss 45D, 45DA and 82 of the Trade Practices Act 1974 (Cth) and the associated jurisdiction of the Court for the torts of assault, interference with contractual relations, procuring a breach of contract; intimidation; unlawful interference with trade and business and conspiracy.
The preliminary point 7 The application states that, on the grounds appearing in the accompanying statement of claim, the applicants' claim (and there are then set out 13 separate claims) certain declarations. It is not necessary that I attempt to summarise those claims but they clearly are capable of falling within claims made in the application for damages and declarations which I have just described as part of the preliminary context of the application itself. The statement of claim is a lengthy document of some 15 pages. It deals with several matters under a number of headings, including Trade Practices Act ss 45D and 45DA (Secondary Boycotts), together with allegations of 'procuring a breach of contract' and of 'interference with contractual relations', 'assault', 'intimidation', 'unlawful interference with trade in business', 'conspiracy' and then with damages. 8 On 26 November 2003, the applicants filed an amended statement of claim. This is somewhat shorter than the earlier version, being 11 pages in length. It deals with the same general topics as the original statement of claim, but it appears that there are differences at least in the way in which the matter is pleaded. However, no application has been made to amend the application itself. 9 On behalf of the respondents, reference is made to Poonon v DCT [1999] NSWSC 1121 (a decision of Austin J) holding that the making and prosecution of an appeal against the orders of the Court for the winding up of the company involves a function or power exercisable on the company's behalf, which, before the liquidation, that function or power would be exercised by the directors of the company, who are its officers; however, in view of the liquidation, s 471A is a barrier to their taking that step. 10 It is, however, common ground that the institution of the present proceedings in the name of the first applicant required the written approval of the liquidator. 11 In Poonon, Austin J went on to say: '8 In my opinion, the defendant's appeal fromDeputy Registrar Howe's orders must fail for two reasons which I shall explain. I do not base my decision on the procedural irregularities of the appeal, but rather on matters of a more substantial kind. The further application for a stay must fail because there are no new grounds not before Bergin J on 26 October 1999 and no arguable basis for a stay once the appeal has failed. 9 The first substantive reason arises out [of] ... s 471A of the Corporations Law. That section states that while a company is being wound up in insolvency or by the Court, a person cannot perform or exercise, and must not perform or exercise, a function or power as an officer of the company except (relevantly) as liquidator, or with the liquidator's written approval, or with the approval of the Court. The making and prosecution of an appeal against the orders of the Court for the winding up of a company involves a function or power exercisable on the company's behalf. But for the liquidation that function or power would be exercised by the directors of the company, who are its officers. But in view of the liquidation s 471A is a barrier to their taking that step. 10 I was informed from the bar table that Mr Geale is the sole director of the defendant and is providing instructions to the defendant's solicitors. I was also told, though there is no evidence of this, that the liquidator has been informed of the proceedings and does not wish to intervene. Of course, that falls well short of the written approval of which s 471A speaks. I see no ground for the Court to grant its approval to allow the director to bring and prosecute an appeal in the present circumstances. It follows that this appeal has not been competently brought. This conclusion assumes, of course that the Corporations Law is valid; that is a subject to which I shall return.' 12 I respectfully agree with his Honour's conclusion. 13 On behalf of the respondents, it is submitted (with reference to the first paragraph of the liquidator's letter dated 17 December 2002) that for a matter to 'arise out of' an event, it requires the event to have 'materially contributed' to the matter complained of. Reference is made by the respondents in this connection to the observations of the Full High Court in Smith v Australian Woollen Mills Limited [1933] 50 CLR 504 at 511 - 512. 14 In my opinion, that decision is of little significance for present purposes. It was, of course, concerned with the construction of a statutory provision in the Workers' Compensation legislation. 15 Here, the question that arises springs out of the text of correspondence between solicitors for the second and third applicants and the liquidator. In this connection, in my opinion, it is crucial to understand the context in which the letter of consent, dated 17 December 2002, was written. That letter acknowledges receipt of the letter written by the solicitors for the second and third applicant and, inevitably, in my view, refers back to that letter. It will be recalled that in the solicitors' letter reference was made to: 'A possible cause of action arising out of the Building Industry Royal Commission against the CFMEU and certain members of that organisation. The claim would, broadly, be based on statutory and common law counts relating to the CFMEU's interference with our clients' business activities such that contracts were placed in jeopardy, work could not be completed on at least one project and projects which were "in the pipeline" were no longer on offer to our clients or their company.' (Emphasis added.) 16 It was in that context that the liquidator responded, speaking of a 'possible cause of action arising out of the Building Industry Royal Commission against the CFMEU'. The respondents further developed their submission by contending that - 'none of the matter pleaded in the amended statement of claim, and the bulk of the pleadings in the original statement of claim are ... matters that "arise out of" the Building Industry Royal Commission, as there is not [a] suggestion of any material contribution to the matters complained of by the Royal Commission. As such, those proceedings, insofar as they are commenced and continued ... are commenced without authority and in breach of s 471A and should be dismissed.' 17 In the course of argument, it emerged that the respondents wished to focus attention solely on the statement of claim or amended statement of claim as the case may be. In my opinion, this is an impermissible course in the context of the application of s 471A. In my opinion, for the purposes of the application of that provision, the crucial process in terms of the institution of a proceeding is the filing of the application. 18 As mentioned, I have not endeavoured to summarise the 13 declarations claimed in the application. However, it may be noted that at least four of the declarations sought nominate the provisions of ss 45D and/or 45DA of the Trade Practices Act in terms of the declarations claimed. There are also, on the declarations claimed, references to common law counts, in particular, intimidation, assault and malicious conspiracy. 19 It will be recalled that in the letter dated 25 September 2002, reference was made (in the second paragraph) to a claim of a 'possible cause of action arising out of the Building Royal Industry Commission'. But the crucial statement, in my opinion, is in what follows, that is to say, the sentence: 'The claim would broadly be based on statutory and common law counts relating to the CFMEU's interference with our clients' business activities such that contracts were placed in jeopardy, work could not be completed on at least one project and projects which were "in the pipeline" were no longer on offer to our clients or their company.' 20 The CFMEU, of course, is the first respondent in the proceedings and, as I have mentioned, the declarations claimed in the application can clearly be characterised as based on statutory and common law counts relating to that interference. 21 It follows, in my opinion, that the consent dated 17 December 2002 complied with the provisions of s 471A(1A)(c) for the purpose of the institution of the current proceedings. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.
Associate: Dated: 18 March 2004 Counsel for the Applicant: Mr C A Evatt QC
Construction Forestry Mining & Energy Union
TCB Concreters Pty Ltd