In the matter of Terra Cresta Business Solutions Pty Limited

HIS HONOUR: On 5 February 2016, an originating process was filed in the name of Terra Cresta Business Solutions Pty Limited (in liquidation) as plaintiff, joining as defendant Hall Chadwick Pty Limited. An amended originating process was filed on 15 March 2016, purporting to substitute as defendant the partners in Hall Chadwick (NSW), and claiming the following relief:

The defendants, by solicitors, filed an appearance on 4 April 2016. The retainer of those solicitors was disputed, and they filed a notice of ceasing to act on or about 2 May 2016, when new solicitors were appointed to act for the defendants. By interlocutory process filed on 9 May 2016, the defendants now seek orders dismissing the amended originating process or, alternatively, striking it out.

The application for dismissal or striking out is mounted on a number of bases. However, as one of them is sufficient to dispose of the application, it is unnecessary that I deal with all the matters that have been advanced.

Although the named plaintiff is Terra Cresta Business Solutions Pty Limited (in liquidation), the liquidator has indicated that he was not aware that the proceedings had been instituted, and does not consent to the institution of proceedings in the name of the company.

The proceedings are purportedly brought pursuant to an assignment of such choses in action as Terra Cresta may have had against the named defendants, pursuant to a deed of sale of chose in action dated 15 December 2015. The copy of that deed in evidence is not stamped, and thus it may well be that it is unenforceable. However, assuming that it should be regarded as enforceable, it provides for the assignment by the liquidator, at the request of TCBS Group Holdings Pty Limited and Mr Owen Salmon, of all of the liquidator's right, title and interest in connection with the “chose in action”, as defined. Such an assignment, if effective, does not authorise the assignee to sue in the name of the company, but rather to sue in its own name, pleading the assignment as a material fact in in its cause of action.

Accordingly, the company in liquidation is not a proper plaintiff, and the proceedings as presently constituted, with the company as the named plaintiff, have not been duly authorised or commenced. That of itself is a sufficient basis for an order that the proceedings be permanently stayed or dismissed.

In so far as the proceedings seek an inquiry under Corporations Act, s 423, it is well-established that an application for such an inquiry involves two steps: first, a determination as to whether an inquiry should be conducted; and second, the inquiry itself. [1] However, it has been said that proceeding under s 423 is generally, although not universally, inappropriate unless the question is one amenable to summary determination. [2]

In so far as the originating process seeks declarations of contravention of Corporations Act, s 420, and, in particular, s 420(2)(k), those are sections conferring powers, not imposing obligations, and the concept of a contravention of those provisions does not make sense.

It may be – I offer no opinion - that Mr Salmon has legitimate ground for complaint about aspects of the conduct of the receivers, but the present proceeding, as presently constituted, and much of the relief sought in it, is not a way in which such a complaint can be pursued. The fact that I have not adverted to the other claims for relief should not be taken as indicating that on any future application they would be regarded as viable. I have not considered one way or the other the limitation points that arise. If further proceedings are brought, and when the precise relief sought is formulated, they may be considered then.

Therefore, the Court orders that the amended originating process be dismissed, with costs.