[2024] NSWSC 913

Patrick Hanna v New Emerald Energy Pty Ltd

Leave on terms granted to the plaintiffs to proceed against defendant company (see [28])

Catchwords

CORPORATIONS — voluntary administration — legal proceedings against company — application under s 440D(1) of the Corporations Act — where plaintiffs seek leave to proceed against company for summary judgment and gross sum costs — where administrators of the company neither consent to nor oppose the application — where grant of leave would occasion no prejudice to administrators — where proof of debt procedure would be more costly and less efficient — HELD — leave to proceed granted.

Cases cited

Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited (No 2)[2023] NSWCA 246

Legislation cited

Corporations Act 2001 (Cth), § 440D(1)

Judgment

INTRODUCTION

[1]
This is an application by the plaintiffs, Patrick Hanna and PH Capital Pty Ltd in its own capacity and as the trustee for the Hanna Family Trust, seeking an order pursuant to s 440D(1)(b) of the Corporations Act 2001 (Cth) for leave to proceed against the first defendant, New Emerald Energy Pty Ltd (administrators appointed) (NEE).
[2]
NEE recently went into administration on the verge of the hearing of the plaintiffs’ application for summary judgment on their claims and a gross sum costs order against NEE in these proceedings. The plaintiffs seek leave so that they can proceed with their application for summary judgment and a gross sum costs order against NEE and any enforcement of the judgment and orders made on that application.
[3]
The plaintiffs do not seek any orders against the second defendant, New Wilkie Energy Pty Ltd (administrators appointed) (NWE).
[4]
The administrators of NEE neither consent to nor oppose the application for leave.

RELEVANT FACTS

[5]
On 20 December 2023, these proceedings were commenced by the plaintiffs against each of NEE and NWE by the filing of the summons and commercial list statement.
[6]
The plaintiffs’ claims in the proceedings relate to the repayment of four loans alleged to have been made by Mr Hanna to NEE and one loan alleged to have been made by PH Capital to NEE, the latter of which is alleged to have been guaranteed by NWE. The total amount alleged to be owing by NEE to Mr Hanna is in excess of $500,000, including interest. Depending on the way in which certain construction issues are determined, the total amount alleged to be owing by NEE to PH Capital is between about $1.5 million and $3 million plus interest.
[7]
On 27 December 2023, NWE went into voluntary administration.
[8]
On 27 February 2024, the summons and commercial list statement were served on NEE. In the commercial list statement the plaintiffs say that the only issues likely to arise are the amounts payable by NEE.
[9]
On 6 March 2024, a notice of appearance for NEE was filed in the proceedings by its then solicitors, Corrs Chambers Westgarth.
[10]
On 4 April 2024, Ball J made orders by consent in the proceedings, including that NEE was to request particulars of the commercial list statement by 12 April 2024, the plaintiffs were to respond to that request by 19 April 2024 and NEE was to file and serve any commercial list response by 6 May 2024.
[11]
On 12 April 2024, Corrs sent a letter to the solicitors for the plaintiffs, Addisons, requesting particulars of the commercial list statement.
[12]
On 19 April 2024, Addisons sent a letter to Corrs responding to their request for particulars.
[13]
On 3 May 2024, Corrs filed a notice of removal of solicitor for NEE in the proceedings.
[14]
NEE did not file or serve a commercial list response by 6 May 2024.
[15]
On 22 May 2024, Addisons sent a letter by email to NEE referring to its failure to comply with the court’s order to file and serve its commercial list response by 6 May 2024 and stating that if NEE had not filed that commercial list response by 27 May 2024, the plaintiffs would file an application for summary judgment against NEE without further notice.
[16]
NEE did not file or serve a commercial list response by 27 May 2024.
[17]
On 19 June 2024, the plaintiffs filed a notice of motion seeking summary judgment and a gross sum costs order against NEE, which was listed to be heard on 28 June 2024.
[18]
On 20 June 2024, a notice of appearance for NEE was filed in the proceedings by its new solicitors, De Mestre and Company.
[19]
On 26 June 2024, NEE went into voluntary administration, with Jamieson Louttit of JLA Insolvency & Advisory appointed as administrator. As a result, the plaintiffs require the consent of the administrator of NEE or leave of the court to proceed against NEE by virtue of the operation of s 440D(1) of the Corporations Act.
[20]
On 5 July 2024, the first meeting of the creditors of NEE resolved to replace Mr Louttit as administrator and appoint David Osborne, Richard Tucker and David Johnstone of KordaMentha as administrators in his place.
[21]
On 9 July 2024, Addisons sent a letter to Mr Osborne of KordaMentha seeking the consent of the administrators of NEE to proceed against NEE for the purpose of the hearing and determining of the plaintiffs’ application for summary judgment and a gross sum costs order against NEE.
[22]
On 11 July 2024, Ashurst, the solicitors for the administrators of NEE, sent a letter to Addisons stating that NEE would not provide their consent for the plaintiffs to proceed against NEE and indicated that they would not consent to nor oppose the application for such leave.
[23]
Today I granted leave to the plaintiffs to amend the notice of motion filed 19 June 2024 to add an order seeking leave to proceed against NEE.
[24]
There was no appearance on behalf of the administrators of NEE at the hearing today after they were called outside court.

LEGAL PRINCIPLES

[25]
Section 440D(1) of the Corporations Act provides:
[26]
In Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited (No 2) [2023] NSWCA 246, Gleeson JA at [17]–[24] conveniently summarised the principles relevant to determining an application for leave to proceed under s 440D(1)(b) of the Corporations Act as follows:

CONSIDERATION

[27]
In my opinion, it is appropriate that I grant leave to the plaintiffs to proceed with their application for summary judgment and a gross sum costs order for the following reasons:
1. (1)
  NEE went into administration on the verge of the hearing of the plaintiffs’ application for summary judgment and a gross sum costs order, meaning that it was ready to be heard and nearly all of the costs with respect to the time and effort of preparing that application had been incurred by the plaintiffs.
2. (2)
  The court is in a position to deal with the plaintiffs’ application for summary judgment and a gross sum costs order within a relatively short period of time.
3. (3)
  The administrators of NEE neither consent to nor oppose the application for leave. As a result, it is not anticipated that they would spend any time or incur any costs with respect to the application for summary judgment and a gross sum costs order and it is unlikely that they would seek to contest it. In other words, it is unlikely that the administrators will be distracted by the proceedings from their own duties and obliged to incur legal costs.
4. (4)
  If the court determines the application for summary judgment and a gross sum costs order in the plaintiffs’ favour, they will be in a position to lodge proofs of debt in the administration of NEE without the administrators of NEE undertaking any time intensive and costly investigations and legal analysis before adjudicating on the plaintiffs’ claims. This will also relieve the administrators of NEE from the distraction involved in ruling on the proofs of debt.
5. (5)
  I am satisfied that given the nature of the claims that are made by the plaintiffs against NEE there would likely be significant disputation between them in any proof of debt procedure at the present time and that the pursuit of the summary judgment application will be a quicker, more efficient and cheaper means of determining the amounts of the debts owing by NEE to the plaintiffs.

ORDERS

[28]
For the reasons set out above, I propose to make the following orders:
1. (1)
  Grant leave to the plaintiffs pursuant to s 440D(1)(b) of the Corporations Act 2001 (Cth) to proceed with these proceedings against the first defendant only for the purposes of the plaintiffs prosecuting the amended notice of motion filed 26 July 2024 (Motion) and any enforcement of the judgment and orders made pursuant to the determination of the Motion.
2. (2)
  The costs of this application are the plaintiffs’ costs in the cause.
3. (3)
  Direct that the proceedings be listed in the Commercial (Motions) List on 16 August 2024.