DJ Builders & Son Pty Ltd (in liq), in the matter of DJ Builders & Son Pty Ltd (in liq) v Queensland Building and Construction Commission

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judge: REEVES J
• Judgment Date: 29 November 2019
• Neutral Citation: [2019] FCA 2018
• Date: 29 November 2019

FEDERAL COURT OF AUSTRALIA

DJ Builders & Son Pty Ltd (in liq), in the matter of DJ Builders & Son Pty Ltd (in liq) v Queensland Building and Construction Commission [2019] FCA 2018

File number:	QUD 361 of 2019
Judge:	REEVES J
Date of judgment:	29 November 2019
Catchwords:	PRACTICE AND PROCEDURE – application by the second applicant for leave nunc pro tunc to continue this proceeding in the name of the first applicant, the company – whether the proceeding has sufficient prospects of success – whether the practicalities associated with the proceeding have been addressed – application granted
Legislation:	Corporations Act 2001 (Cth) Queensland Building and Construction Commission Act 1991 (Qld)
Cases cited:	Aliprandi v Griffith Vintners Pty Ltd (in liq) (1992) 6 ACSR 250 Cadima Express Pty Ltd v Deputy Commissioner of Taxation (1999) 157 FLR 424; [1999] NSWSC 1143 Carpenter v Pioneer Park Pty Ltd (2008) 71 NSWLR 577; [2008] NSWSC 551 Chahwan v Euphoric Pty Ltd (2008) 227 FLR 43; [2008] NSWCA 52 Challis v Hoffmann (2017) 121 ACSR 585; [2017] NSWSC 870 Commissioner for Revenue (ACT) v Slaven (2009) 178 FCR 334; [2009] FCA 744 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; [1999] HCA 59 El-Saafin & Anor v Franek & Ors (No 2) [2018] VSC 683 HFGC Nominees (No 2) Pty Ltd v Hancock As Liquidator of 246 Arabella Investments Pty Ltd (In Liq) (2010) 80 ATR 442; [2010] FCA 1005 Scarel Pty Ltd v City Loan & Credit Corporation Pty Ltd (1988) 17 FCR 344 Vagrand Pty Limited (In liquidation) v Fielding (1993) 41 FCR 550
Date of hearing:	13 August 2019
Registry:	Queensland
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Category:	Catchwords
Number of paragraphs:	32
Counsel for the First Applicant:	Mr A Messina
Solicitor for the First Applicant:	Scoglio Law
Solicitor for the Second Applicant:	Mr S Ivantsoff of Lodestar Litigation
Counsel for the Respondent:	Mr SE Seefeld
Solicitor for the Respondent:	Queensland Building and Construction Commission

ORDERS

		QUD 361 of 2019
IN THE MATTER OF DJ BUILDERS & SON PTY LTD ACN 119 020 049 (IN LIQUIDATION)
BETWEEN:	DJ BUILDERS & SON PTY LTD ACN 119 020 049 (IN LIQUIDATION) First Applicant ; FORWARD PACK PTY LIMITED ACN 120 534 090 Second Applicant
AND:	QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION Respondent

JUDGE:	REEVES J
DATE OF ORDER:	29 November 2019

THE COURT ORDERS THAT:

1. By close of business on 6 December 2019, the parties are to consult, prepare and submit to my chambers a set of draft orders to reflect the contents of these reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

REEVES J:

INTRODUCTION

1. Until 29 March 2016, DJ Builders & Son Pty Ltd (in liquidation) held a builder’s licence issued by the Queensland Building and Construction Commission (the QBCC). On that date, the QBCC decided to suspend its licence for failing to meet the “Minimum Financial Requirements” for such a licence.

2. Forward Pack Pty Ltd holds 50% of the share capital in DJ Builders. It wants DJ Builders to pursue a proceeding against the QBCC for negligence and breach of contract connected with the circumstances in which the QBCC suspended its building licence and, so it claims, caused it to be placed in liquidation. Accordingly, it has filed this application, supported by a draft statement of claim, seeking leave nunc pro tunc to continue this proceeding in DJ Builders’ name. It has applied for that leave under the Court’s “inherent [sic – implied] power”. Its reliance on the implied power of the Court was necessary because part 2F1.1A and, therefore s 237, is not available in circumstances where the company is in liquidation (see Chahwan v Euphoric Pty Ltd (2008) 227 FLR 43; [2008] NSWCA 52 at [125] per Tobias JA, with Beazley and Bell JJA agreeing).

3. While Mr Glen Oldham, the liquidator of DJ Builders, does not consent to Forward Pack being granted the leave sought, he also does not oppose it provided that the company’s creditors are fully protected against any adverse costs orders or similar consequences that may flow from the proceeding being pursued.

4. The QBCC, the respondent, is, perhaps unsurprisingly, opposed to Forward Pack’s application. It contends that the claims Forward Pack wishes to pursue are, at their highest, “only just arguable” and do not meet the “solid foundation” requirement (see below at [6]). It submitted that it would therefore be futile to allow it to continue this proceeding in DJ Builders’ name.

THE PRINCIPLES

5. Ordinarily the liquidator should be left to decide whether or not to commence proceedings on behalf of a company in liquidation (see Scarel Pty Ltd v City Loan & Credit Corporation Pty Ltd (1988) 17 FCR 344 at 350 per Gummow J). However, there are certain limited circumstances where an application of this kind can succeed. They are, in very brief summary, if the applicant can show that the proceeding has sufficient prospects of success to warrant it being pursued and the practicalities associated with the proceeding are addressed. The attitude of the liquidator to the proposed proceeding is also a relevant consideration.

6. The requirement that the proceeding should have sufficient prospects of success has been variously expressed as “some arguable foundation” (see Aliprandi v Griffith Vintners Pty Ltd (in liq) (1992) 6 ACSR 250 at 252 per McLelland J); that “the claim [has] a solid foundation” (see Cadima Express Pty Ltd v Deputy Commissioner of Taxation (1999) 157 FLR 424; [1999] NSWSC 1143 at [45] per Austin J, citing Vagrand Pty Limited (In liquidation) v Fielding (1993) 41 FCR 550); “sufficiently arguable” (see Commissioner for Revenue (ACT) v Slaven (2009) 178 FCR 334; [2009] FCA 744 at [46] per Rares J); and the Court should not permit the proceeding to be pursued if it is “a waste of time” (see HFGC Nominees (No 2) Pty Ltd v Hancock As Liquidator of 246 Arabella Investments Pty Ltd (In Liq) (2010) 80 ATR 442; [2010] FCA 1005 at [10] per Perram J). These decisions have dealt with a range of statutory provisions and circumstances which, while similar to the present, are not the same. In that event, noting that I do not consider there is any significant difference in these various approaches, I propose to apply the “sufficiently arguable” test propounded by judges of this Court.

7. The practicalities mentioned above have included, pertinent to this matter, whether the company and liquidator have been properly secured, in respect of any adverse costs order they may sustain as a result of the contemplated proceedings or any other costs, charges and expenses they may incur in the winding up consequent upon the continuation of this proceeding (see Carpenter v Pioneer Park Pty Ltd (2008) 71 NSWLR 577; [2008] NSWSC 551 at [34] per Barrett J and El-Saafin & Anor v Franek & Ors (No 2) [2018] VSC 683 at [167] per Lyons J). It should be noted, however, that satisfaction of these criteria for the exercise of the power does not compel the grant of leave (see Challis v Hoffmann (2017) 121 ACSR 585; [2017] NSWSC 870 at [28] per Gleeson JA).

THE PRACTICALITIES

8. I will deal with the practicalities matter first. At the outset of this application, Forward Pack offered a limited indemnity secured by a personal undertaking from Mr Lawrence Doré, a director of Forward Pack and DJ Builders. That undertaking was to be supported by Mr Doré keeping the savings in his two personal superannuation funds, of which he is the trustee, available to meet any call on...