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[2006] FCA 1497
Federal Court of Australia
2006-09-26
Merkel J, Young J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 There are four matters before the Court. The first concerns an application for leave under s 471B of the Corporations Act 2001 (Cth). The second concerns an application for leave to file and serve an amended defence. The third concerns further directions in this proceeding and the last matter relates to the costs of the directions hearing on 29 August 2006. The defendants do not consent to, but do not oppose, the grant of leave to the plaintiff to proceed against the company in liquidation pursuant to s 471B.
Application for leave under section 471B 2 The grounds of the application for leave to proceed against the first defendant in liquidation are set out in an affidavit of Joanne Louise McCauley sworn 19 September 2006. Those grounds are as follows. 3 First, the Court has previously granted leave to the plaintiff to bring and prosecute this proceeding against a company which was at that stage under administration. Merkel J granted the leave application under s 440D(1) of the Corporations Act. Secondly, it is said that the plaintiff's claims are unable to be determined by the liquidators of the first defendant in the ordinary course of the liquidation in the sense that any proof of debt is likely to be rejected by the liquidators and the decision would then be appealed by the plaintiff. Thirdly, it is said that this litigation has progressed to a stage where it is almost ready to be fixed for trial. Fourthly, it is said that the plaintiff would be unduly prejudiced in the event that it was not given an opportunity to proceed with this application. 4 In oral submissions, Mr Galvin, counsel for the defendants, drew attention to a further matter. Mr Galvin pointed out that the claims brought by the plaintiff included proprietary claims, including a claim that a lien existed which would not be able to be resolved by a proof of debt procedure. 5 I am satisfied that it is an appropriate case to grant leave under s 471B. The question for the Court is whether there is a real dispute which involves serious questions and whether the action will impede the orderly winding-up of the company or cause prejudice to other creditors. Relevant factors include the nature of the claim, including whether the claim involves any proprietary elements such as a claim for a lien, and the stage at which the proceedings have reached when the company is placed in liquidation. It is also relevant whether there is a real prospect that the liquidator would reject any proof of debt so that the claimant would have to press its case in an appeal to the Court. Having regard to the stage of these proceedings and the nature of the claims raised, it is appropriate to grant leave. Cases that support that view include Ogilvie-Grant v East (1983) 7 ACLR 669 at 672 and Re Hewson and Douglas Ltd (in liq) [1993] 2 Qd R 375. 6 Accordingly, I will grant leave under s 471B for the plaintiff to proceed against the first defendant in liquidation.
Amended defence 7 The second matter arises from an interlocutory application by the defendants to file and serve an amended defence. This application is neither consented to nor opposed by the plaintiff. The plaintiff could not identify any basis of substance for opposing the application. I have considered the nature of the amendments and the fact that they follow soon after the making of significant amendments to the statement of claim. In my opinion, leave should be granted to file and serve the amended defence.
Directions 8 The third matter concerns the future directions that should be made in relation to this proceeding. After hearing submissions from counsel, I will make directions as follows: (1) The defendants have leave to file and serve an amended defence by 4.00 pm this day. (2) The plaintiff file and serve any reply to the amended defence by 13 October 2006. (3) The plaintiff file and serve any affidavits upon which it intends to rely in this proceeding by 24 November 2006. (4) The defendants file and serve any affidavits upon which they intend to rely by 22 December 2006. (5) The plaintiff file and serve any affidavits in reply by 6 February 2007. (6) The directions hearing in this matter be adjourned to 9.30 am on 20 February 2007.
Costs 9 The last matter argued concerned the costs of the directions hearing on 29 August 2006. On that occasion I reserved the costs of the directions hearing that day. I was informed by the solicitor for the plaintiff that the plaintiff wished to have an opportunity to consider and to contest the application for leave to file and serve an amended defence. 10 That contest has not eventuated. Today the plaintiff neither consented to nor opposed the application for leave to file and serve an amended defence. 11 Counsel for the plaintiff said that the plaintiff was having some difficulty in dealing properly with the costs application as the affidavit of Ms Alison Umbers, in support of the costs application, was only received late yesterday. At that time, and indeed since then, the plaintiff has not been able to obtain instructions from Ms McCauley, the solicitor who appeared on the 29 August 2006 directions hearing, as she is interstate. 12 In those circumstances, I do not propose to vary the order I made on 29 August 2006 reserving the costs of the directions hearing that day. I will reserve liberty to apply to the defendants to re-agitate the question of the costs of the directions hearing on 29 August 2006 at the directions hearing I have set down for 20 February 2007. 13 I will reserve the costs of both the interlocutory applications and the costs of the directions hearing this day. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Young.
Solicitor for the Plaintiff: Mills Oakley Lawyers
Solicitor for the Defendants: Harwood Andrews Lawyers
In the matter of MotorACN 005 188 054 Pty Ltd (in liq); The Elastomers Pty Ltd
MotorACN 005 188 054 Pty Ltd