Immer v Girotto Precast Pty Ltd [2009] NSWSC 1019 (29 September 2009)

Last Updated: 6 October 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Immer v Girotto Precast Pty Ltd [2009] NSWSC 1019


JURISDICTION:
Common Law

FILE NUMBER(S):
20031/2008

HEARING DATE(S):
14 April 2009

JUDGMENT DATE:
29 September 2009

PARTIES:
Glen Thomas Immer (Plaintiff)
Girotto Precast Pty Ltd (First Defendant/Cross-Claimant to First Cross-Claim/First Cross-Defendant to Second Cross-Claim/First Cross-Defendant to Third Cross-Claim)
Rescrete Industries Pty Ltd (Second Defendant/First Cross-Defendant to First Cross-Claim/Second Cross-Defendant to Second Cross-Claim/Cross-Claimant to Third Cross-Claim)
Baseline Constructions Pty Ltd (Third Defendant/Second Cross-Defendant to First Cross-Claim/Cross-Claimant to Second Cross-Claim/Second Cross-Defendant to Third Cross-Claim)
Hi-Rise Erection Pty Ltd (Fourth Defendant/Third Cross-Defendant to Second Cross-Claim)
QBE Insurance (Australia) Limited (Fourth Cross-Defendant to Second Cross-Claim)

JUDGMENT OF:
Rothman J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
S J Walsh (mentioned on behalf of Plaintiff)
D Furnari - solicitor (First Defendant/Cross-Claimant to First Cross-Claim/First Cross-Defendant to Second Cross-Claim/First Cross-Defendant to Third Cross-Claim)
O Samolis - solicitor (Second Defendant/First Cross-Defendant to First Cross-Claim/Second Cross-Defendant to Second Cross-Claim/Cross-Claimant to Third Cross-Claim)
S J Walsh (Third Defendant/Second Cross-Defendant to First Cross-Claim/Cross-Claimant to Second Cross-Claim/Second Cross-Defendant to Third Cross-Claim)
No appearance (Fourth Defendant/Third Cross-Defendant to Second Cross-Claim)
A J McInerney (Fourth Cross-Defendant to Second Cross-Claim)

SOLICITORS:
Taylor & Scott Lawyers (Plaintiff)
HWL Ebsworth Lawyers (First Defendant/Cross-Claimant to First Cross-Claim/First Cross-Defendant to Second Cross-Claim/First Cross-Defendant to Third Cross-Claim)
Wotton + Kearney Lawyers (Second Defendant/First Cross-Defendant to First Cross-Claim/Second Cross-Defendant to Second Cross-Claim/Cross-Claimant to Third Cross-Claim)
Thompson Cooper Lawyers (Third Defendant/Second Cross-Defendant to First Cross-Claim/Cross-Claimant to Second Cross-Claim/Second Cross-Defendant to Third Cross-Claim)
Lee & Lyons Lawyers (Fourth Defendant/Third Cross-Defendant to Second Cross-Claim)
Lee & Lyons Lawyers (Fourth Cross-Defendant to Second Cross-Claim)


CATCHWORDS:
CORPORATIONS – deregistered company – action against – reinstatement of deregistered but formerly insured company – company previously in liquidation – need to appoint liquidator – need to ensure liquidator and former director given opportunity to present any relevant submission

LEGISLATION CITED:
Corporations Act 2001 (Cth)
Insurance Contracts Act 1984 (Cth)
Law Reform (Miscellaneous Provisions) Act 1946

CATEGORY:
Procedural and other rulings

CASES CITED:
AFG Insurances Ltd v Andjelkovic [1981] FCA 104; (1981) 54 FLR 398
CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd [2006] NSWSC 690; (2006) 201 FLR 296
Chappell v Coyle (1985) 2 NSWLR 73
International Bulk Shipping & Services Ltd v Minerals & Metals Trading Corporation of India [1996] 1 All ER 1017
Johnston v Centralian Industries Pty Ltd [1995] HCA 1; (1995) 13 ACLC 1,064
Morris v Harris [1927] AC 252
Oswald v Bailey (1987) 11 NSWLR 715
Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559
Re Kilkenny Engineering Pty Ltd (in liq) (1976) 13 SASR 258
Schlieske v Overseas Construction Co-Pty Ltd [1960] VR 195
Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18
URS Australia Pty Ltd v Australian Securities and Investments Commission [2007] FCA 1939; (2007) 25 ACLC 1,648
Zhang v Minox Securities Pty Ltd [2008] NSWSC 689

TEXTS CITED:


DECISION:
(i) Baseline Constructions Pty Ltd file and serve an affidavit or affidavits attesting to the service, by letter, of the proposed orders set out in paragraph [21] of the reasons for judgment accompanying these orders, the identity of the last liquidator of Hi-Rise Erection Pty Ltd, together with the name of a proposed liquidator and evidence of that liquidator’s consent to acting as such. Such affidavit or affidavits are to be filed and served, within 14 days of the date of this judgment;[<br>][<br>](ii) The solicitors for Baseline Constructions Pty Ltd and QBE Insurance (Australia) Pty Ltd confer, and seek to reach agreement, on the identity of any liquidator to be appointed pursuant to the aforesaid proposed orders;[<br>][<br>](iii) QBE Insurance (Australia) Pty Ltd and Mrs Brown be granted leave to file and serve, within 28 days of the date of this judgment, any affidavit and/or submissions relating to the identity of the proposed liquidator and any issue relating to substituted service of the statement of claim or any other matter arising from the proposed orders;[<br>][<br>](iv) The notices of motion of Baseline Constructions Pty Ltd stand over for directions until 9.30am on 11 November 2009;[<br>][<br>](v) Costs of these proceedings are reserved.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

ROTHMAN J

29 SEPTEMBER 2009

20031/08 Glen Thomas Immer v Girotto Precast Pty Ltd

JUDGMENT

1 HIS HONOUR: Glen Thomas Immer has sought to commence proceedings against four defendants, arising from his injury on a building site. Because the injury was caused, it is alleged, when Mr Immer fell through a concrete floor, when the panels cracked, a number of corporations are alleged to be negligent. As one would expect, there are cross-claims between the various corporations. In particular, there is a cross-claim, commenced by the third defendant, Baseline Constructions Pty Ltd (“Baseline”), purportedly against the fourth defendant, Hi-Rise Erection Pty Ltd (“Hi-Rise”).

2 Because Hi-Rise is no longer registered, Baseline seeks to substitute QBE Insurance (Australia) Limited (“QBE”) instead of Hi-Rise as the fourth defendant and the third cross-defendant to the second cross-claim. As a preliminary step, Baseline seeks to reinstate the registration of Hi-Rise, pursuant to the provisions of the Corporations Act 2001 (Cth). QBE opposes each of those steps. Each step depends upon the terms of legislation governing the issue, being the Corporations Act, as earlier mentioned, and the Law Reform (Miscellaneous Provisions) Act 1946. The relevant provisions are in the following terms:

Corporations Act 2001 (Cth)

“601AH Reinstatement by ASIC

(1) ASIC may reinstate the registration of a company if ASIC is satisfied that the company should not have been deregistered.

Reinstatement by Court

(2) The Court may make an order that ASIC reinstate the registration of a company if:

(a) an application for reinstatement is made to the Court by:

(i) a person aggrieved by the deregistration; or

(ii) a former liquidator of the company; and

(b) the Court is satisfied that it is just that the company’s registration be reinstated.

(3) If the Court makes an order under subsection (2), it may:

(a) validate anything done between the deregistration of the company and its reinstatement; and

(b) make any other order it considers appropriate.

Note: For example, the Court may direct ASIC to transfer to another person property vested in ASIC under subsection 601AD(2).

ASIC to give notice of reinstatement

(4) ASIC must give notice of a reinstatement in the Gazette. If ASIC exercises its power under subsection (1) in response to an application by a person, ASIC must also give notice of the reinstatement to the applicant.

Effect of reinstatement

(5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.”

Law Reform (Miscellaneous Provisions) Act 1946

“6 Amount of liability to be charge on insurance moneys payable against that liability

(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person’s liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.

(2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later than the happening of that event, the provisions of subsection (1) shall apply notwithstanding the winding-up.

(3) Every charge created by this section shall have priority over all other charges affecting the said insurance moneys, and where the same insurance moneys are subject to two or more charges by virtue of this Part those charges shall have priority between themselves in the order of the dates of the events out of which the liability arose, or, if such charges arise out of events happening on the same date, they shall rank equally between themselves.

(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured:

Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken.

(5) Such an action may be brought although judgment has been already recovered against the insured for damages or compensation in respect of the same matter.

(6) Any payment made by the insurer under the contract of insurance without actual notice of the existence of any such charge shall to the extent of that payment be a valid discharge to the insurer, notwithstanding anything in this Part contained.

(7) No insurer shall be liable under this Part for any greater sum than that fixed by the contract of insurance between the insurer and the insured.

(8) Nothing in this section shall affect the operation of any of the provisions of the Workers Compensation Act 1987 or the Motor Vehicles (Third Party Insurance) Act 1942.

(9) Despite subsection (8), this section applies in relation to a policy of workers compensation insurance entered into by an employer (whether entered into before or after the commencement of this subsection), where the employer:

(a) being a natural person, has died, or is permanently resident outside the Commonwealth and its Territories, or cannot after due inquiry and search be found, or

(b) being a corporation (other than a company that has commenced to be wound up), has ceased to exist, or

(c) being a company, corporation, society, association or other body (other than a company that has commenced to be wound up), was at the time when it commenced to employ workers to which the policy relates incorporated outside the Commonwealth and its Territories and registered as a foreign company under the laws of any State or Territory and is not so registered under any such law, or

(d) being a company, is in the course of being wound up.”

3 The facts relevant to this application are within very narrow compass. The accident, which occurred at the construction site that is alleged to have injured Mr Immer, also fatally injured Mr Brendan Gerard Brown, the director of Hi-Rise. That accident occurred on 8 February 2005, and Hi-Rise was deregistered as a corporation on 21 April 2006. Mr Immer commenced proceedings on 7 February 2008.

4 Mr Immer alleges in the statement of claim that he was employed by Marr Contracting Pty Ltd, the supplier of the mobile crane and crew, as a dogman, and was assisting with the installation of concrete panels. The concrete panels were used to construct a concrete floor and the accident occurred when one or more of the panels cracked, the floor fell away and Mr Immer fell through the floor, suffering injury, loss and damage. On its face, the Statement of Claim pleads an arguable case against each of the named defendants.

Reinstatement of Hi-Rise

5 QBE is the fourth cross-defendant to the second cross-claim. Lee & Lyons Lawyers represent QBE in the proceedings. They also, purportedly, represent Hi-Rise and are the legal representatives identified on an affidavit filed on behalf of Hi-Rise on the motion. That affidavit is the affidavit of Nicholas Bruce Calnan of 9 March 2009. The affidavit attests to the fact that QBE was the relevant insurer of Hi-Rise at all material times and that Hi-Rise was placed into liquidation and then deregistered, effective 21 April 2006. This state of affairs is confirmed in the affidavits of Andrew Ronald Howard of 27 March 2009 and 14 April 2009, filed on behalf of Baseline. It is unclear, in the circumstances, how Hi-Rise appears in the proceedings or files an affidavit.

6 As a consequence of the deregistration being effective from 21 April 2006, Hi-Rise was defunct at the time that proceedings were commenced by Mr Immer, and at the time that Baseline commenced the cross-claim, and the proceedings against it are a nullity. For proceedings to be commenced effectively against a party, such party must be in existence, as a person, at the time of the commencement: see Morris v Harris [1927] AC 252; Schlieske v Overseas Construction Co-Pty Ltd [1960] VR 195 at 196; Re Kilkenny Engineering Pty Ltd (in liq) (1976) 13 SASR 258; International Bulk Shipping & Services Ltd v Minerals & Metals Trading Corporation of India [1996] 1 All ER 1017.

7 QBE contends that it is unjust to reinstate Hi-Rise, because of the delay in bringing the proceedings for reinstatement and substitution, the lack of information as to the circumstances of Hi-Rise prior to deregistration, the death of its director, the lack of information as to the company’s future activities, and the lack of information as to whether any person is likely to be prejudiced by the reinstatement. Each of the foregoing factors, if it were made out, would be relevant to the discretion to reinstate. Further, QBE submits that reinstatement under the Corporations Act cannot retrospectively render efficacious the service of the statement of claim or the service of the cross-claim.

8 There is some merit in the submission that there has been some delay in seeking to regularise the proceedings. As earlier stated, the proceedings were commenced almost two years after the deregistration of the company and no sufficient explanation has been given as to the action, if any, taken on behalf of Mr Immer, in order to ascertain the status of each of the defendants. The same criticism, the necessary changes being made as to date and parties, may be made of Baseline, in relation to the commencement of the cross-claim.

9 Baseline has made this procedural application for the purpose of regularising the proceedings and in order, ultimately, to substitute QBE for Hi-Rise. QBE was aware of the proceedings at least from the time it was served with Baseline’s cross-claim to which it is separately joined. Moreover, QBE have not shown any special prejudice and the only material before the Court is that its prejudice is limited to the possibility that, following reinstatement of Hi-Rise, it may be substituted in its place as the defendant and/or cross-defendant. On one view, QBE may not have an interest or standing in opposing the reinstatement of Hi-Rise. Nevertheless, QBE, as already stated, opposed the reinstatement.

10 Even though Baseline seeks to reinstate Hi-Rise for the limited purpose of regularising the proceedings and substituting QBE in lieu of Hi-Rise, if the Court were minded to make a reinstatement order, it could not do so for a limited purpose only: Re Future Life Enterprises Pty Ltd (1994) 33 NSWLR 559. The reinstatement, if ordered, would be for all purposes, even though the catalyst, and rationale, is to regularise the proceedings. Even if the Court were to take the view that the company to be reinstated would exist for only a short time, such reinstatement, while effective, would be valid and operative for all purposes.

11 An application for reinstatement under the Corporations Act may be made by a former liquidator or a person aggrieved by the deregistration. A liberal construction has been given to the term “a person aggrieved” and persons may fit into that category even though, at the time of deregistration, they did not. Baseline, which now seeks to proceed against the deregistered company, and cannot, is a person aggrieved by the deregistration.

12 The mere fact that Hi-Rise, if reinstated, is likely to be wound up again almost immediately thereafter, does not preclude an order for reinstatement being made. Baseline’s motion seemed to rest on the proposition that Hi-Rise, if it were reinstated, would be treated as if it were, and always had been, registered for all of the time since it was deregistered. Orders for the reinstatement of a corporation under the provisions of s 601AH of the Corporations Act have effect nunc pro tunc (see s 601AH(5) of the Act), but do not validate a step taken in relation to the company during the time of its deregistration: see CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd [2006] NSWSC 690; (2006) 201 FLR 296. Thus, it would seem, reinstatement of Hi-Rise would not, without further steps being taken, render the service, if any, that has already been effected, valid or efficacious.

13 I am not persuaded, assuming (without deciding) QBE has standing to oppose the application, that the application for reinstatement should be refused on the basis of any of the discretionary factors upon which QBE relies. I do not consider that the delay has caused prejudice of any material kind and I consider that it is just, and consistent with the achievement of the most just, quick and cheap resolution of the real issues in these proceedings, for the reinstatement order to be made. While QBE asserts that it has lost the opportunity of investigating some aspects of the circumstances that will be relevant to the proceedings, it is not obvious what opportunity has been lost that was not lost by virtue of the death of Mr Brown. In other words, I am persuaded that there is no additional prejudice to QBE, associated with the reinstatement of Hi-Rise and the substitution of QBE in its place.

14 QBE submits that a more convenient approach would be to refuse the application and require Baseline to apply under s 601AG of the Corporations Act to proceed directly against QBE. In order to make such an application, Mr Immer and/or Baseline would need an extension of time and QBE has not waived any rights it may have in that respect. Nor has QBE submitted that s 601AG of the Corporations Act is unarguably available (even with an extension of time) to either or both Mr Immer and/or Baseline. In those circumstances, it is appropriate to exercise the discretion under s 601AH and reinstate Hi-Rise: see URS Australia Pty Ltd v Australian Securities and Investments Commission [2007] FCA 1939; (2007) 25 ACLC 1,648.

15 However, there are some aspects of this application that require more attention. Prior to its deregistration, Hi-Rise was in liquidation. The identity of the liquidator is not before the Court. Further, the liquidator is not a party to the proceedings. Nor is Mrs Brown, the last remaining director and shareholder, although she has been notified of these proceedings and her legal representative contacted. If reinstatement were to be ordered, by virtue of the operation of the Corporations Act, the company would be reinstated into the control of the liquidator: Johnston v Centralian Industries Pty Ltd [1995] HCA 1; (1995) 13 ACLC 1,064.

16 If orders were to be made by the Court, it would be necessary to appoint a liquidator and make orders for the service of the Statement of Claim. It seems, on a preliminary view, that an order for substituted service by service on QBE may be appropriate, especially in light of the application for substitution. Alternatively, and possibly more conveniently given the filing of an affidavit, substituted service might be effected on Lee & Lyons. However, I have not heard the parties on that issue, and would give QBE, any liquidator appointed and Mrs Brown the opportunity to put submissions on such a course: see Johnston, supra, and compare Chappell v Coyle (1985) 2 NSWLR 73. ASIC has been notified of these proceedings and, on the basis of some detailed or inconsequential conditions, does not oppose the orders.

Substitution of QBE

17 The written submissions filed by QBE on the operation of the Law Reform (Miscellaneous Provisions) Act and the substitution of QBE under s 6(4) of that Act are fundamentally based upon two discrete propositions. Firstly, QBE submits that, because the proceedings commenced against Hi-Rise are a nullity, no order can be made for substitution. Secondly, if such an order were within jurisdiction, the Court would not do so because the precondition to the exercise of the discretion has not been satisfied and, in the alternative, for discretionary reasons, the discretion ought not be exercised.

18 I have determined (see above) that the proceedings commenced against Hi-Rise (a then non-existent company) were a nullity and, until that issue is rectified, no order for substitution can be made. However, each of the issues has been agitated before the Court. As to the preconditions to the exercise of the discretion, the Court is satisfied that Baseline has an arguable case against Hi-Rise (as does Mr Immer) (AFG Insurances Ltd v Andjelkovic [1981] FCA 104; (1981) 54 FLR 398 at 400; Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 at [21]); that there is an arguable case that the policy of insurance issued by QBE responds to the claim made by Hi-Rise (AFG Insurances, supra; Tzaidas, supra); and that if judgment were obtained against Hi-Rise, it would be unable to meet that judgment (Oswald v Bailey (1987) 11 NSWLR 715 at 742; Zhang v Minox Securities Pty Ltd [2008] NSWSC 689 at [11]).

19 The foregoing disposes of the preconditions to the exercise of discretion. To the extent that QBE claim a lack of liability on the basis that Hi-Rise has not made a claim, if such could ever be a basis upon which the provisions of s 6(4) of the Law Reform (Miscellaneous Provisions) Act could be circumvented, it would seem to be covered by the provisions of s 54 of the Insurance Contracts Act 1984 (Cth), being an act (defined to include an omission) of the insured, occurring after entry into the contract, by reason of which the insurer was seeking to refuse to pay the claim. I have already determined that the insurer’s interests are not prejudiced, and therefore the amount of the cover is not subject to any diminution.

20 As a consequence of the foregoing, coupled with the absence of any substantial prejudice beyond the ordinary prejudice associated with being a defendant in proceedings, grounds for making an order have been established and no good reason exists for refusing the order.

Conclusion

21 The Court proposes to make orders in or to the following effect:

(i) The Australian Securities & Investments Commission (“ASIC”) reinstate the registration of Hi-Rise Direction Pty Ltd ACN 111 334 966 (Deregistered) (“the Company”);

(ii) Baseline Constructions Pty Ltd pay ASIC any fees payable by the Company, associated with the aforesaid reinstatement, including any outstanding fees and penalties which are due to ASIC, within 14 days of Baseline Constructions Pty Ltd lodging the reinstatement order with ASIC;

(iii) An identified person be appointed liquidator of the Company;

(iv) Baseline Constructions Pty Ltd be liable for the costs of the liquidator.

22 Those orders will not issue for at least 28 days. Within 14 days, Baseline is to file and serve an affidavit with notice to the Court, through my Associate, stating: the identity of an appropriate liquidator; if she or he be different, the identity of the last liquidator; that these intended orders have been brought to the attention of Mrs Brown; and, that any proposed liquidator consents to being appointed as such. The Court makes clear that following reinstatement of Hi-Rise, it is intended that orders that effect the substitution of QBE would, in the material and submissions thus far considered, issue, including any grant of leave that may be necessary. But the foregoing is necessarily preliminary and dependent on what other submissions may be forthcoming.

23 The Court makes the following orders:

(i) Baseline Constructions Pty Ltd file and serve an affidavit or affidavits attesting to the service, by letter, of the proposed orders set out in paragraph [21] of the reasons for judgment accompanying these orders, the identity of the last liquidator of Hi-Rise Erection Pty Ltd, together with the name of a proposed liquidator and evidence of that liquidator’s consent to acting as such. Such affidavit or affidavits are to be filed and served, within 14 days of the date of this judgment;

(ii) The solicitors for Baseline Constructions Pty Ltd and QBE Insurance (Australia) Pty Ltd confer, and seek to reach agreement, on the identity of any liquidator to be appointed pursuant to the aforesaid proposed orders;

(iii) QBE Insurance (Australia) Pty Ltd and Mrs Brown be granted leave to file and serve, within 28 days of the date of this judgment, any affidavit and/or submissions relating to the identity of the proposed liquidator and any issue relating to substituted service of the statement of claim or any other matter arising from the proposed orders;

(iv) The notices of motion of Baseline Constructions Pty Ltd stand over for directions until 9.30am on 11 November 2009;

(v) Costs of these proceedings are reserved.

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LAST UPDATED:
1 October 2009