Bradman's Windows & Doors Pty Ltd v Marbret Pty Ltd & Ors [1999] QSC 424

.§1c 7'1". Cf2!f State Reporting Bureau TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION JUDGE O'BRIEN No 2247 of 1999 BRADMAN'S WINDOWS & DOORS PTY LTD ACN 010 409 819 and MARBRET PTY LTD ACN 059 929 378 and PETER ANDREW THOMAS and KAREN ELIZABETH THOMAS BRISBANE ... DATE 05/11/99 JUDGMENT 1 REVISED COPfES ISSUED State Reporting Bureau Date ;z,I IOL/ Plaintiff First Defendant Second Defendants .1111 Flllllr, Tile Law Courts, Gl'"rge Street, Brishaue, Q...WOO Telephol1e: (07) 32-17 -I,"\liO Fax: (07) JZ-I7 55.12 -- 1 of 5 -- 051199 T14/SE25 M/T CMS108/99 (OIBrien DCJ) HIS HONOUR: This is an application for a summary judgment against a company and its directors who provided guarantees with respect to the cost of goods supplied by the plaintiff to the company. Paragraph 6 of the guarantee is in the following terms: III charge' all my property both real and personal present and future with the amount of my indebtedness until discharged, such indebtedness to include all matters referred to in clause 2 hereof. II According to ordinary principles which I need not for present purposes descend into, the case for summary judgment is clearly made out. There is no defence disclosed to the plaintiff1s claim. The issue, however, is complicated by the fact that as of 4 November 1999 the first defendant is in voluntary administration. See the letter that has been marked Exhibit 1 in this hearing. Section 440D(1) of the Corporations Law provides that: IIDuring the administration of a company and proceeding _ in a Court against the company or in relation to any of its property cannot be begun or proceeded with except (a) with the administrator1s written consent or (b) with the leave of the Court and in accordance with such terms if any as the Court imposes. 1I Section 440J(1) further provides: IIDuring the administration of a company (a) a guarantee of liability of the company cannot be enforced as against (i) a director of the company who is a natural person or (ii) a spouse, de facto spouse or relative of such a director and (b) without limiting paragraph (a) a proceeding in relation to such a guarantee cannot be begun against a director spouse, de facto spouse or relative except with the leave of the Court and in 10 20 38 50 accordance with such terms, if any, as the Court '~(I imposes. II 60 2 JUDGMENT -- 2 of 5 -- \ ~--~ 051199 T14/SE25 M/T CMS108/99 (O'Brien DCJ) Mr McGhee, who appeared for the applicant/plaintiff, had initially placed reliance upon section 441B(1) of the Corporations Law which for present purposes applies if before the beginning of the administration of a company a chargee exercised any power in relation to property of the company for the purpose of enforcing a charge on that property. As Thomas J said in BBC Hardware Limited v. C THomes Pty 1'0 Ltd [1997] 2 QdR 123, if the plaintiff satisfies any of the 20 requirements of section 441B(1) it is not inhibited by the requirement for leave which is set out in section 440B. Mr McGhie had submitted that as the plaintiff has lodged a caveat on property owned by the guarantors then the section has application in circumstances of the present case. It is, however, argued that the reference to such property in section 441B(1) (e) must be a reference to property of the company as set out in section 441B(1) (a). I consider that that argument is correct. There can, therefore, be no question in my view of granting leave to proceed pursuant to section 440D of the Corporations Law. However, I should also add that despite some initial objection in this respect I am satisfied that section 42B of the Corporations Law Queensland confers appropriate jurisdiction on this Court for the purposes of any leave application. 3 JUDGMENT ", r . • }V 50 4(; 60 -- 3 of 5 -- 051199 T15/TW12 M/T CMS104/99 (O'Brien DCJ) However, the conclusion I have expressed in relation to section 441B does not dispose of the matter since section 440J clearly recognises that a guarantee of liability can still be enforced with the leave of the Court. This, indeed, was what occurred in part, at least, in the BBC Hardware case. There Thomas J, as His Honour then was, said at page 127: "I should also mention the submission of Mr Cronin for the second defendants to the effect that section 444J of the Corporations Law protects guarantors from further proceedings in a similar way to the way companies are protected when an administration commences. The leave of the Court is necessary before proceeding further against guarantors under that section. Mr Cronin pointed out by reference to the explanatory memorandum to the Corporations Law that this was thought desirable because, 'it is anticipated that the directors of companies who have generally guaranteed the obligations of the company, will be discouraged from appointing an administrator for the company if immediately upon the appointment that guarantee becomes enforceable. ' No doubt appreciation of this was a factor in the decision of Williams J in Stegbar pty Ltd against Mayfield 1993 13 ACSR 354. In that case His Honour held but before granting the necessary leave to proceed. there would have to be a good reason for departing from the presumption underlying section 440J that the creditor ought not be able to proceed against the guarantor. His Honour considered that before leave was granted it would, at least, be necessary to be satisfied that there would be no prejudice to any deed of company 1 " 10 20 c arrangement executed by the company. 30 In the present case there has been no unfair prejudice or potential injustice suggested as a consequence of my finalisation of the position between these three immediate parties. It was submitted on behalf of the administrator that there has not yet been enough time to complete necessary investigations. However, no particular detriment or benefit was pointed to as a likely produce 4 JUDGMENT 50 40 60 -- 4 of 5 -- 051199 T15/TW12 M/T CMS104/99 (O'Brien DCJ) of adjourning the matter until the end of the administration. In other words there was no suggestion of any intention to attempt to demonstrate the falsity of the plaintiff's proposition nor was there any overall contest between unsecured and secured creditors suggested. No defence was foreshadowed. Further costs of legal process would be made necessary by granting the adjournment and postponing authorisation of the sale to an undisclosed date." In my view these observations of Mr Justice Thomas are entirely appropriate to the circumstances of the present case. For this reason I propose to grant the necessary leave pursuant to section 440J of the Corporations Law and my orders are these. Firstly, that the plaintiff/applicant have leave to proceed against the company's guarantors pursuant to section 440J. Further I make orders in terms of paragraphs 1B and 2 of the application. The application for judgment against the first defendant is adjourned to a date to be fixed. MR McGHEE: Sorry, what were those two again, please, B 1 and 2, Your Honour. HIS HONOUR: B, terms of paragraph 1B and paragraph 2. MR McGHEE: 1B and 2. I do apologise. Thank you. HIS HONOUR: be fixed. MR McGHEE: And I've effectively adjourned 1A to a date to Do you understand, Mr McGhee? Thank you, Your Honour, I am, yes. HIS HONOUR: Two is the costs order. Thank you gentlemen. THE COURT ADJOURNED AT 2.39 P.M. 5 JUDGMENT 10 20 W 40 50 40 60 -- 5 of 5 --