Health Management Systems (Australia) Pty Ltd v Transport for NSW (No 2)

On 9 November 2022, I delivered a judgment in this matter in which I dismissed an application by the plaintiff, Health Management Systems (Australia) Pty Ltd (HMS), to carry on these proceedings by Mr George Guorgi: Health Management Systems (Australia) Pty Ltd v Transport for NSW [2022] NSWSC 1516. Mr Guorgi is the director of HMS and together with his wife holds all of the shares in that company. At the time of delivering judgment, I stood the matter over until 2 December 2022.

On 1 December 2022, the Court made the following orders by consent:

HMS did not file a notice of appointment of a solicitor in accordance with those orders. On 24 February 2023, the defendant, Transport for NSW (TfNSW), filed a notice of motion seeking an order that the proceedings be dismissed. The notice of motion was returnable on 3 March 2023. On 2 March 2023, the motion was stood over by consent to 10 March 2023.

On 9 March 2023, Mr Guorgi filed an unsworn affidavit in which he indicated that he proposed to make an application “to intervene in these proceedings on behalf of HMS pursuant to the relevant provisions of sections 236 and 237 of the [Corporations Act 2001 (Cth)]”. Those sections relevantly provide:

On 10 March 2023, TfNSW’s application for dismissal of the proceedings was listed for hearing on 17 March 2023. Mr Guorgi did not file any formal application under s 237 of the Corporations Act. However, TfNSW was content to proceed on the basis that an application under that section was before the Court. This judgment concerns that application and TfNSW’s application for summary dismissal.

It is clear from Mr Guorgi’s unsworn affidavit, and from oral submissions made by Mr Guorgi on 17 March 2023, that HMS does not intend to appoint a solicitor. Mr Guorgi’s evidence is that it cannot afford to do so. However, he led no objective evidence concerning its or his own financial position. It follows that HMS is not in a position to pursue the proceedings and that the proceedings should be dismissed unless Mr Guorgi succeeds in his application under s 237 of the Corporations Act.

In my opinion, that application must fail for three reasons.

First, Mr Guorgi is not acting in good faith in bringing the application. It is plain that the application has been brought by Mr Guorgi in an attempt to get around my earlier judgment that Mr Guorgi not be permitted to represent HMS in this proceeding. As Matthews AsJ explained in Collis v Bank of Queensland Ltd [2021] VSC 724 at [46] where an application was made under s 237 in similar circumstances:

Second, in my opinion, the application is futile. If the application succeeded, it would still be necessary for the proceedings to be brought in the name of HMS. The question would then arise whether Mr Guorgi was entitled to represent HMS in that proceeding: see Worldwide Enterprises Pty Ltd v Silberman [2010] VSCA 17; (2010) 26 VR 595 at 600 [25] per Weinberg JA (with whom Bongiorno JA agreed). For the reasons given in my earlier judgment, Mr Guorgi would not be given leave to represent HMS.

Third, even if the conclusion of the previous paragraph is wrong, in my opinion, it is not in the best interests of HMS that the action be brought. The proceedings will expose HMS to what could be a very substantial costs order against it. Mr Guorgi has not agreed to indemnify HMS. The most he has said is that “I intend to make an up-front offer to meet costs, but I will be unable to continue if the costs and financial risks are too high or expose me to potential financial ruin”. He has not explained what he means by “an up-front offer to meet costs”. He does say in his unsworn affidavit that he will seek a capped costs order. However, there is no reason to believe that such an order would be made.

For the reasons I indicated in my earlier judgment, it is apparent that Mr Guorgi does not have the training or ability to pursue a complicated legal case of the type that he seeks to advance on behalf of HMS. It is not obvious that the claim will succeed. As I indicated in my earlier judgment, there appears to be difficulties in the way in which the case is pleaded. Notwithstanding that the claim was commenced on 28 January 2022, Mr Guorgi has made no attempt to amend the claim, although in his most recent (unsworn) affidavit he has indicated that he wishes to advance a new contractual claim as well as the claims currently pleaded in the list statement. There is a question whether the claims sought to be advanced by Mr Guorgi in HMS’s behalf are statute barred, since TfNSW notified HMS on 7 December 2015 that it was not the successful tenderer, but the proceedings, which primarily complain about the way in which the tender was conducted, were not commenced until 28 January 2022, although an attempt was made to commence them in December 2021. It is not in the best interests of HMS that it be exposed to what could be a very substantial costs order in those circumstances.

Following the hearing of the matter, Mr Guorgi, in correspondence with my Associate, sought leave to file an affidavit explaining concerns he has about the way in which the hearing of TfNSW’s motion was conducted. It is not entirely clear what the purpose of that affidavit would have been. It appears from Mr Guorgi’s correspondence that he seeks to reopen the hearing of the motion for two reasons. First, he submits that he did not have sufficient time to consider a court book provided to the Court by TfNSW at the time of the hearing of the notice of motion. Second, he submits that he had insufficient time to complete his oral submissions.

I do not accept either submission. The court book was prepared largely for the convenience of the Court. It included the pleadings, a copy of my earlier judgment, TfNSW’s motion, the evidence served in connection with the motion, relevant legislation and copies of the cases on which TfNSW intended to rely. Mr Guorgi would have been familiar with most of that material. It was not incumbent on TfNSW to provide Mr Guorgi with copies of relevant authorities before the hearing, particularly when it was Mr Guorgi who made the application under ss 236 and 237 of the Corporations Act and could be expected to have familiarised himself with the principles relevant to such an application.

The issue raised by Mr Guorgi’s application was not a complicated one. In my opinion, Mr Guorgi was given sufficient time to make submissions to the Court in support of his application. Most of the submissions made by him went to the merits of HMS’s case rather than the question whether leave should be granted under ss 236 and 237. It is unclear what further submissions Mr Guorgi could make.

In those circumstances, I refused Mr Guorgi leave to provide the Court with a further affidavit.

It follows that the proceedings must be dismissed with costs.