HARTLAND -v- FIRM CONSTRUCTION PTY LTD (IN LIQ) [2023] WASC 147 (10 May 2023)

1. The plaintiff sustained personal injuries on 21 May 2020 allegedly during the course of his employment with Togail Na Heireann Pty Ltd.[2]

1. CGU Insurance accepted the plaintiff's worker's compensation claim as an employee of Togail Na Heireann Pty Ltd and the plaintiff remains in receipt of workers compensation entitlements.[3]
2. On 21 May 2020 the plaintiff was working for Togail Na Heireann Pty Ltd at a job where the defendant was the builder and occupier of a building project at 8 Macrae Road Applecross in Western Australia.[4]
3. The plaintiff was working on a concrete pour when he received burns to his legs and feet following prolonged exposure to wet concrete. The defendant supplied and operated the boom pump that was pouring the concrete.[5]
4. Annexed to the First Antunovich affidavit are Worksafe documents in relation to the incident during which the plaintiff allegedly sustained the injuries.[6] Those documents evidence an investigation carried out by a Worksafe inspector in relation to the concrete pour carried out by the defendant at the site the plaintiff was working. That investigation was in response to a complaint having been made about serious lime (concrete) burns sustained at a workplace as a result of a concrete pour.[7]
5. The Worksafe documents were obtained pursuant to an application under the Freedom of Information Act 1992 (WA).[8] The documents are redacted. They appear to be print‑outs of screen entries made by the investigating inspector. From the unredacted text it is apparent that more than one person was injured. There is reference to the incident involving the plaintiff as follows:[9]

[and] Matt Harland were having concrete placed into footings by way of concrete placement boom pump supplied by FIRM Construction. In areas of the pour, only a bottom layer of reinforcement mesh was in place. This caused the concreter to stand in deeper concrete to screed and vibrate the concrete as it was placed. The depth of the concrete was greater than the height of their gum boots. This caused concrete to enter their boots causing serious lime (concrete) burns.

1. This account was given to the investigating Worksafe inspector on site some five days after the incident although it is not clear by whom. There is a copy of what appears to be a notice to the defendant from the Worksafe inspector. The notice says the inspector formed an opinion that the defendant had not provided a workplace and system of work, so far as practicable, where the employees were not exposed to hazards. The inspector states he came to that opinion having been informed that on 21 May 2020, a person (whose name has been redacted) and the plaintiff received serious concrete burns to their legs. If the notice has been signed the signature is redacted.[10]
2. The Fourth Antonuvich Affidavit annexes medical reports. The report of Dr Ross Goodheart, neurologist, dated 13 April 2022 diagnoses the plaintiff with 'significant dermatological and soft tissue injury in the setting of alkaline burns'.[11] Dr Goodheart outlines the plaintiff's treatment as comprising of 'surgical debridement and a split skin graft ... courses of physical therapy to include acupuncture ... steroid injections ... [and] approximately ten sessions of laser therapy'.[12]
3. Also annexed to the Fourth Antunovich affidavit are two reports from Dr Daniel Luo, plastic surgeon, both dated 22 June 2022.[13] Dr Luo diagnoses the plaintiff with 'bilateral feet concrete burns on 21 May 2020'[14] and described his current symptoms as 'localised constant stabbing pain in his right ankle at the site of the skin graft'.[15] Dr Luo is of the opinion that the plaintiff's injuries have 'not reached maximum medical improvement.'[16]
4. The plaintiff also relies on the reports of Dr Frederick Ng, consultant psychiatrist, dated 29 August 2022[17] and Dr Victor Cheng, consultant psychiatrist, dated 22 November 2022,[18] who have provided their opinions in relation to further injuries sustained by the plaintiff arising from the incident.
5. Ms Antunovich deposes that based on the medical evidence in support of the plaintiff's injuries she believes the plaintiff will exceed the threshold in Western Australia imposed by the Civil Liability Act 2002 (WA) to enable him to commence common law proceedings against the defendant.[19]
6. A copy of the company extract for the defendant procured from the Australian Securities and Investment Commission (ASIC) on 30 January 2023 reveals that the defendant is under external administration with administrators appointed on 24 November 2022.[20]
7. On 17 February 2023, the administrators informed the plaintiff's solicitor that as at the date of the accident an insurance policy was held by the defendant with QBE Insurance (Australia) (QBE).[21] The solicitors for QBE advised the plaintiff's solicitors that at all times relevant to any potential claim by the plaintiff the defendant maintained a QBE Annual Construction Works policy which provided $20 million cover with a 'worker to worker' deductable of $25,000.[22] The correspondence attached to the Third Antunovich affidavit indicates the insurer cannot comment on whether the policy responds to the claim.[23]

1. The relief sought by the plaintiff arises under s 500(2) of the Act. Section 500(2) provides:
   1. Execution and civil proceedings

...

(2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court imposes.

1. Rule 2.2 of the Supreme Court (Corporations) (WA) Rules 2004 (the Corporations Rules) provides that:

2.2. Originating process and interlocutory process (Forms 2 & 3)

(1) Unless these rules otherwise provide, a person must make an application required or permitted by the Corporations Act to be made to the court ‑

(a) if the application is not made in a proceeding already commenced in the court ‑ by filing an originating process; and

(b) in any other case, and whether or not final or interlocutory relief is claimed ‑ by filing an interlocutory process.

...

(3) An originating process must ‑

(a) be in accordance with Form 2; and

(b) state ‑

(i) each section of the Corporations Act or the ASIC Act, or each regulation of the Corporations Regulations, under which the proceeding is brought; and

(ii) the relief sought.

1. The Corporations Rules stipulate that unless the court otherwise directs, an originating process must be supported by an affidavit stating the facts in support of the process: r 2.4(1). The supporting affidavit must annex a record of a search of ASIC records in relation to the defendant, carried out no earlier than seven days before the originating process is filed: r 2.4(2).

Preliminary issue: can the action be commenced by originating summons?

1. The plaintiff commenced this application by way of originating summons filed on 13 March 2023. It is clear from the terms of the Corporations Rules that any application made under the Act is required to be made by an originating process and supported by an affidavit.[24]
2. A preliminary issue arises as to the effect of non‑compliance with the Corporations Rules.
3. This action seeks relief wholly under the Act. As Barrett J held in Litmus Australia Pty Ltd (in liq) v Canty (2006) NSWSC 196 [43]:

A proceeding will be a 'proceeding ... under the Corporations Act or the ASIC Act' if the claims made and relief sought have their source wholly within the relevant Act. But a proceeding will not fail to be a 'proceeding ... under the Corporations Act or the ASIC Act' just because it also advances claims and seeks relief that have some other source. The first five words of r 1.3(1) are important. If a hybrid proceeding were to arise which, for some reason or other, could not conveniently be conducted in accordance with the Supreme Court (Corporations) Rules, the court itself would exclude those rules as contemplated by those opening words, at the same time making such other arrangements as were conducive to the just, cheap and quick resolution of the particular controversy.

1. His Honour's remarks were cited with approval by Hill J in Destec Pty Ltd v Mineral Resources Limited [2020] WASC 95 [15]. The action in Destec Pty Ltd v Mineral Resources Limited was commenced by writ of summons when the plaintiff was required to commence the action by originating process.[25]
2. The Act and the Corporations Rules are silent as to the consequence of commencing an action by the incorrect process. Section 467A of the Act provides that an application must not be dismissed merely because of a defect or irregularity in connection with the application. Section 467A of the Act only applies to applications made under Part 5.4 or Part 5.4A of the Act. Section 467A therefore has no application to actions seeking leave under s 500 of the Act.
3. Section 1322(2) of the Act provides:

(1) In this section, unless the contrary intention appears:

(a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and

(b) a reference to a procedural irregularity includes a reference to:

(i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and

(ii) a defect, irregularity or deficiency of notice or time.

(2) A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.

...

1. Like the definition of 'procedural irregularity' in s 1322(1)(b)(i), the balance of s 1322 deals with the requirements imposed on a company under the Act rather than procedural irregularities in bringing court proceedings. If proceedings commenced by the incorrect originating process are a procedural irregularity within the meaning of s 1322(1)(b)(ii) I am satisfied proceeding is not invalidated by virtue of s 1322(2) of the Act as there is no substantial injustice that cannot be remedied by court order.
2. Even if s 1322 of the Act does not apply, r 1.3 of the Corporations Rules is in the following terms:

1.3. Application of these rules and the Supreme Court Rules

(a) these rules apply to a proceeding in the court under the Corporations Act, or the ASIC Act, that is commenced on or after the commencement of these rules.

(2) The other rules of the court apply, to the extent that they are relevant and not inconsistent with these rules ‑

(a) to a proceeding in the court under the Corporations Act, or the ASIC Act, that is commenced on or after the commencement of these rules.

1. Rule 1.3 of the Corporations Rules applies the other rules of the court to proceedings under the Act provided they are relevant and not inconsistent. Order 2 r 1(3) of the RSC provides:

(1) Where in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.

...

(3) The court shall not wholly set aside any proceedings or the writ or other originating process by which they were begun on the ground that the proceedings were required by any of these rules to be begun by an originating process other than the one employed.

1. Order 2 r 1 of the RSC specifically requires the court to adopt a remedial approach rather than a technical approach to the question of form.[26] In the absence of any equivalent provision in the Act or the Corporations Rules, r 1.3 of the Corporations Rules applies O 2 r 1(3) of the RSC to these proceeding notwithstanding the reference in O 2 r 1(3) of the RSC to proceedings commenced under 'these rules'.
2. To regularise the proceedings an order will be made that the originating summons filed on 13 March 2023 be treated as if it were the originating process filed under r 2.2 of the Corporations Rules. I am satisfied that the relevant information required to be contained in Form 2, being the prescribed form for the originating process under the Corporations Rules, has been replicated in substance in the originating summons.
3. In addition, the application must be supported by an affidavit annexing a record of a search of ASIC records in relation to the defendant, carried out no earlier than seven days before the originating process is filed: r 2.4(2) of the Corporations Rules. The company extract of the defendant is dated 30 January 2023.[27] The originating summons was filed on 13 March 2023. The final orders will be made upon an affidavit being filed attaching a company extract which is compliant with r 2.4(2) of the Corporations Rules.

Applicable legal principles in relation to leave

1. In Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408, Beech J outlined the principles relevant to an application under s 500(2) for leave to proceed against a company in liquidation in the following terms:[28]
   1. Section 500(2) of the Corporations Act provides that after the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court imposes.
   2. Like provision in respect of companies being wound up in insolvency or by the court is made in s 471B. The same principles govern the grant of leave under these sections.
   3. Part of the purpose of the requirement of leave is to avoid a company in liquidation being subject to a multiplicity of time consuming and expensive actions: Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314, 315 - 317; Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550, 555; Viscariello v Bernsteen Pty Ltd (in liq) [2004] SASC 266 [21].
   4. 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 have reached: Re Gordon Grant (317); Viscariello [21]; Lawless v Mackendrick (No 2) [2008] WASC 15 [35]; Duke v Rain Bow Pty Ltd [2011] VSC 599 [19].
   5. 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: Re Gordon Grant and Grant Pty Ltd (in liq) (1982) 6 ACLR 727, 730; Re Sydney Formworks Pty Ltd (in liq) [1965] NSWR 646, 649 - 650; Re AJ Benjamin Ltd (in liq) [1969] 2 NSWR 374, 376; Duke v Rain Bow Pty Ltd [20].
   6. In Haviland v Joslow (No 4) Pty Ltd [1979] 2 NSWLR 318, 319 Needham J stated that 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 part of damages awarded against it. That was said to be based on the principle that the court should not give its imprimatur to fruitless proceedings which would involve a waste of time and money. That statement of principle has been cited in a number of cases since. See, for example, Maher v Taylor [1984] 1 NSWLR 231, 233; ASIC v Managed Investments Ltd (No 2) [2012] QSC 72 (pages 2 - 3).
   7. In Re AJ Benjamin (376), Street J stated that 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. That statement was cited with approval in Maher v Taylor (234).
   8. 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: Lawless v Mackendrick [No 2] [37]; Re AJ Benjamin; Re Sydney Formworks; Re Coastal Constructions Pty Ltd (1994) 13 ACSR 329.
   9. A claimant seeking leave need only to demonstrate a serious question to be tried: Vagrand Pty Ltd v Fielding (556).
2. I adopt and apply these principles in the determination of this application.
3. The court should not give its imprimatur to fruitless proceedings which would waste time and money. In both Joselyn v Firm Construction Pty Ltd [2023] WASC 36 [12] and Barbatano v Firm Construction Pty Ltd [2023] WASC 37 [11], Hill J gave leave to commence common law proceedings by a plaintiff similarly injured at a workplace having been satisfied on the evidence that the injury was above the threshold in Western Australia for the commencement of common law proceedings.
4. There was no direct evidence of the nature and extent of the plaintiff's injury at the commencement of proceedings save as to the plaintiff's solicitors deposing that the plaintiff had sustained burns to his legs and feet. The Worksafe documents which had been provided under the Freedom of Information Act, and which were annexed to the First Antunovich affidavit described the burns as serious.[29] However these documents had been redacted and the source of the information provided to the inspector was unclear.
5. The plaintiff's solicitors subsequently put forth further evidence as to the nature and extent of the plaintiff's injury.[30]
6. Having regard to the affidavit material before me, I am satisfied that the plaintiff has demonstrated that there is a serious question to be tried.
7. Against the nature and seriousness of the plaintiff's claim, I have weighed up the status of the defendant, a company under external administration. There is no evidence before me of any prospect of surplus assets in the defendant, a factor which would be a good reason to refuse leave. However, in this case there is evidence of a relevant insurance policy. There is also evidence that the defendant's insurer has been put on notice of the plaintiff's proposed claim by way of letter dated 13 March 2023.[31]
8. Whether the insurer will ultimately respond to a claim brought by the defendant cannot be discerned from the affidavit material.
9. Counsel nevertheless seeks orders that contemplate that any judgment entered against the defendant would not be able to be enforced without leave of the court. This form of order provides a safety net for the defendant and creditors. It is envisaged that upon enforcement of any judgment the court may revisit the matter of insurance and whether the insurer will meet any judgment sum.

1. In all of the circumstances, I am satisfied that there is a serious question to be tried. In the absence of any evidence about the assets held by the liquidator and potential claims by creditors, the evidence in relation to the availability of insurance favours leave being granted.

1. In all of the circumstances and for these reasons, I propose to make the following orders upon the filing of a further affidavit annexing a company extract of the defendant that complies with r 2.4 of the Corporations Rules:
   1. The originating summons filed on 13 March 2023 be treated as if it were an originating process filed under r 2.2 of the Corporations Rules.
   2. The plaintiff have leave to commence civil proceedings in the District Court pursuant to s 500(2) of the Act against the defendant.
   3. The plaintiff not execute on any judgment against the defendant without leave of the Supreme Court.
   4. The costs of the application be costs in the District Court proceedings.

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

[7] First Antunovich affidavit 'MA1' (4) ‑ (11).

[9] First Antunovich affidavit 'MA1' (8).

[10] First Antunovich affidavit 'MA1' (11).

[11] Fourth Antunovich affidavit 'MMA8' (4).

[12] Fourth Antunovich affidavit 'MMA8' (5).

[13] Fourth Antunovich affidavit 'MMA9' and 'MMA10'.

[14] Fourth Antunovich affidavit 'MMA9' (13).

[15] Fourth Antunovich affidavit 'MMA9' (11).

[16] Fourth Antunovich affidavit 'MMA10' (18).

[17] Fourth Antunovich affidavit 'MMA11'.

[18] Fourth Antunovich affidavit 'MMA11'.

[19] Fourth Antunovich affidavit [5].

[20] First Antunovich affidavit 'MA2' (16).

[23] Third Antunovich affidavit 'MA7' (3).

[24] Destec Pty Ltd v Mineral Resources Limited [2020] WASC 95 [11].

[25] Destec Pty Ltd v Mineral Resources Limited [18].

[26] Corruption and Crime Commission of Western Australia v McCusker AO QC [2009] WASC 44 [12] ‑ [13]. See also Re Banning; Ex Parte Banning [2018] WASC 313 [19] - [24].

[28] Latimer v Cutwood Panels Pty Ltd (in liq) [6] - [14].

[29] First Antunovich affidavit 'MA1' (8).