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[2024] NSWSC 1378

Growthbuilt Pty Ltd v Huses Electrics Pty Ltd

Second Defendant’s First Cross-Claim Cross-Summons and Cross List Statement be struck out; Second Defendant pay the Plaintiff’s costs of the motion

Catchwords

CIVIL PROCEDURE – commencement of proceedings – where second defendant purports to bring a cross-claim against plaintiff seeking relief that could only properly be brought by first defendant – second defendant is the sole director of the first defendant – where leave is required to represent a company – leave not sought – cross-claim struck out for incompetence

Cases cited

  • Connectland Pty Ltd v Porthaven Pty Ltd[2011] NSWSC 616
  • Damjanovic v Maley (2002) 55 NSWLR 149;[2002] NSWCA 230
  • Re GJ Mannix Ltd [1984] 1 NZLR 309

Legislation cited

  • Civil Procedure Act 2005 (NSW)
  • Corporations Act 2001 (Cth)
  • Uniform Civil Procedure Rules 2005 (NSW)

Judgment

  1. [1]

    By subcontract dated 13 May 2022, the plaintiff, Growthbuilt Pty Ltd (“Growthbuilt”), engaged the first defendant, Huses Electrics Pty Ltd (“Huses Electrics”), to provide electrical and fire services in relation to a development in Bellevue Hill.

  2. [2]

    The second defendant, Mr Hussein Mougarbel, was named in the contract as a guarantor of the obligations of Huses Electrics.

  3. [3]

    Growthbuilt brings these proceedings seeking damages against Huses Electrics under the contract and against Mr Mougarbel in relation to his guarantee.

  4. [4]

    On 19 September 2024, Mr Mougarbel purported to bring a Cross-Claim, in his own name, against Growthbuilt seeking damages and other relief that could only properly be brought by Huses Electrics.

  5. [5]

    By Notice of Motion filed on 27 September 2024, Growthbuilt seeks to have that Cross-Claim struck out.

  6. [6]

    Such rights as Huses Electrics may have under the contract can only be pursued by Huses Electrics. Absent leave under s 237 of the Corporations Act 2001 (Cth), and none is sought, such relief cannot be sought by Mr Mougarbel. The Cross-Claim is incompetent and must be struck out.

  7. [7]

    It remains a matter for Huses Electrics whether it wishes to bring a Cross-Claim.

  8. [8]

    Mr Mougarbel currently appears for himself and has purported to appear for Huses Electrics.

  9. [9]

    The general rule is that a company can only bring proceedings in this Court by a solicitor.

  10. [10]

    Thus, Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 7.1(2), provides:

  11. [11]

    Rule 7.1(3) qualifies that rule as follows:

  12. [12]

    Rule 7.2(1) provides:

  13. [13]

    The affidavit referred to in UCPR r 7.2(1) must comply with UCPR r 7.2(2), which provides:

  14. [14]

    Despite these rules, the Court has an incidental power to control its own processes and can grant leave to any person to appear on behalf of a litigant. [1]

  15. [15]

    Further, s 14 of the Civil Procedure Act 2005 (NSW) confers a discretion on the Court to dispense with any rule requirement for legal representation, and with any other formality relating to representation in the proceedings. [2]

  16. [16]

    That discretion is generally only exercised in favour of a director wishing to appear on behalf of a company in emergency circumstances or in relation to straightforward matters. [3]

  17. [17]

    Mr Mougarbel should not assume that the Court will exercise its discretion so as to permit him to represent Huses Electrics in any cross-claim against Growthbuilt.

  18. [18]

    Mr Mougarbel should understand that the usual rule is that the Court will only permit a company to bring proceedings, including a cross-claim, by a solicitor.

  19. [19]

    I order that the second defendant’s First Cross-Claim Cross-Summons and Cross List Statement be struck out.

  20. [20]

    I order that the second defendant pay the plaintiff’s costs of the plaintiff’s Notice of Motion of 27 September 2024.

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.