FEDERAL COURT OF AUSTRALIA

Battaglia v Provident Capital Limited (In Liquidation) (No 1) [2014] FCA 750

THE COURT ORDERS THAT:

1.    Leave be granted to the applicant to proceed against the first respondent, pursuant to s 500(2) of the Corporations Act 2001 (Cth).

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

REASONS FOR JUDGMENT

1    This is an application for leave to proceed against the first respondent, which is subject to a members’ voluntary winding up, instituted under s 491 of the Corporations Act 2001 (Cth) (‘the Act’). Proceeding against a company in such a circumstance cannot be commenced without the leave of the Court on such terms as the Court imposes: see s 500(2). The applicant commenced proceedings against the first respondent, Provident Capital Limited (in liquidation) (receivers and managers appointed) on 11 December 2013.

2    The first respondent was placed in voluntary liquidation prior to that time. It follows that in order to pursue the current proceedings, the applicant requires leave under ss 500(2) of the Act. In these proceedings, the applicant seeks relief against the first respondent in relation to a mortgage apparently granted by it to him to support facilities given in favour of his son. As I understand the argument, it will be contended that this was done in substance without his consent and without any proper explanation.

3    The proceedings were accompanied at an early stage by an application for an interlocutory injunction to restrain the exercise by the respondent of a power of sale conferred upon it by s 83 of the Property Law Act 1974 (Qld). That application was dismissed by Foster J when it came before him on 11 December 2013, on the basis that it had not been brought in a sufficiently timely fashion. I was informed from the bar table that his Honour did not consider the question of whether there was a serious question to be tried. I make that observation because the authorities concerning s 500(2) and its antecedents indicate that the relevant test on an application for leave to proceed against a company subject to a members’ voluntary winding up is that there should be a serious question to be tried: see Oceanic Life Limited v Insurance and Retirement Planning Service Pty Ltd (in liq) (1993) 11 ACSR 516 at 520.

4    If the applicant successfully demonstrates that in no meaningful sense did he consent to the granting of the security documentation to the first respondent for the purpose of securing loans to his son, or he otherwise establishes that whatever explanation was given to him regarding those documents was insufficient as a matter of law, then it seems to me that one would readily conclude that there was a serious question to be tried with respect to these proceedings. It seems to me that an analysis of what is alleged by Mr Battaglia in this case leads to the conclusion that there is a serious question to be tried and in those circumstances I will grant leave, pursuant to s 500(2), for the applicant to proceed against the first respondent.

5    I should say as a matter of completeness that I am satisfied that the application was served on the parties that needed to be served and that the application was neither conceded to nor opposed by the respondents. I do not make any order as to costs.

Associate:

Dated:    18 July 2014