IN THE DISTRICT COURT

HELD AT SOUTHPORT

QUEENSLAND

[2001] QDC 004

No. 106 of 1995

BETWEEN:JOHN HUNT

Plaintiff

AND:JOSEPH BRIAN SMITH & MARCIA MARY SMITH

First Defendant

AND:TOTALISATOR ADMINISTRATION BOARD OF QUEENSLAND

Second Defendant

AND:clisby international pty ltd (in liquidation)

Trading as POLYPIPE FURNITURE (ACN 109 09 203)

Third Defendant

REASONS FOR JUDGMENT – R D HALL, DCJ

Judgment delivered on the 2nd day of February 2001

The plaintiff in this action sues for damages for personal injuries caused on 12 March 1992 when a stool on which he sat in a TAB agency collapsed.  The third defendant was sued as the manufacturer of the stool and is at the moment the only remaining defendant on the papers, the proceedings against the first and second defendant having been discontinued by notice filed on 16 May 2000.  The third defendant however, was in liquidation when the action was commenced against it.  Leave of the Supreme Court was never obtained as is required under the Corporations Law s 440D, and on 7 July 1995 it was deregistered.  Consequently the plaintiff has an action with no legal person as defendant.

He now applies for leave to amend his plaint to add as defendant Mercantile Mutual Insurance (Australia) Limited, alleged to be the public liability insurer of the third defendant at the material time, so that he may pursue remedies thought to be provided by s 601AG of the Corporations Law.

S 601AG is headed, “Claims against insurers of deregistered Company” and provides:- 

“A person may recover from the insurer of a company that is deregistered an amount that is payable to the company under the insurance contract if:

1. (a)
   The company had a liability to a person; and
2. (b)
   The insurance contract covered that liability immediately before deregistration.”

The plaintiff claims that the preconditions to liability in the respondent insurer set out in subparagraphs (a) and (b) above are clearly shown by the terms of para’s 9-13 and 20 of the Affidavit of Warwick Rutledge Chesters but it seems to me that the applicant faces many obstacles.

The respondent argues that the plaintiff’s action against the third defendant is void because he failed to obtain leave to commence proceedings.  Further, it says that the “Proposed Amended Statement of Claim discontinues the action against the third defendant with the result that no proceedings exist to which the respondent can be joined.”  Again, a period of more than two years has elapsed since the last step was taken in the action, if indeed one still exists, and the plaintiff must seek leave to proceed before this present application could be brought (Rule 389 of the Uniform Civil Procedure Rules).

Mr Liddy for the respondent, contends that the only proper course for the plaintiff is to discontinue the present action and start anew, issuing proceedings directly against the respondent’s insurer.  That course is clearly open to the plaintiff.  His cause of action arose on 12 March 1992 and was still alive when the third defendant was wound up by the Supreme Court on 19 August 1993.  While the authorities on the question are not unanimous, it seems correct in principle, and I believe an Australian Court would find, that the Limitation Act ceased to operate in respect of the plaintiff’s claim against the defendant as from the date of the winding up of the third defendant (see Bagnon v WorkCover Qld 2000 QCA 421 [unreported] McPherson JA at pages 6-8).

The plaintiff responds that leave to proceed is not required, because he last took a step in the proceedings allegedly on 8 June 2000 with the consent of the first and second defendants.  That step appears to have been the filing of the Notice of Discontinuance which, as I have indicated, was, in fact, filed on 10 May 2000.  That argument manifests a misconception of the meaning of Rule 389.  In my view, a Notice of Discontinuance cannot be regarded as a “step in the proceedings”.  That term is said to mean something in the nature of an application to the Court (i.e. Ives and Barker v Willans [1894] 2 CH478).  To constitute a proceeding, the act or activity must have the characteristic of carrying the action forward.  It may be some step taken towards the judgement or relief sought in the action or one taken with a view to continuing the litigation between the parties.  The term “proceeding” suggests something in the nature of a formal step in the prosecution of an action and the proceeding need not be a step taken or an act done in a Court or its Registry.  The authority for the above propositions is provided by the Full Court decision in Citicorp Australia Limited v Metropolitan Public Abattoir Board (1992) 1QD 592 at 594).  Consequently in my view, the filing of a Notice of Discontinuance cannot be regarded as a “step in a proceeding”.  On the contrary, it would appear to be quite the opposite, as it plays no part in advancing the action towards judgement.

Prior to the filing of the Notice of Discontinuance the last activity by the plaintiff in respect of the action was the filing of a Summons to renew the plaint on 5 October 1998.  That application did not proceed and in any event, would not be a “step in the proceedings” (Musmuci v Kero Constructions Pty Ltd [1976] QD R 135, Matthews J).

The plaintiff is, of course, not limited to his own activity in the action and can rely upon any step taken by any other party.  In Thompson v Kirk (1995) 1QD R 463, the plaintiff relied upon proceedings taken by the defendant in the action within the three year period required under Order 90 Rule 9 of the Rules of the Supreme Court.   Derrington J said at page 463:

“(The) matter was considered in this Court in Red Ru Pipeline Construction Pty Ltd v State of Queensland (1983) No 5375; Williams J, 5 April 1989, unreported).”

It was decided there that proceedings taken by any parties to the action are relevant to the rule, for it expresses no material limitation in its description of the proceedings referred to.  Moreover, it was observed by a very experienced Judge that in his experience, proceedings taken by the party opposing, had always been regarded as relevant in these circumstances.  With respect, I agree in every respect.  For example, the defendant’s entry of appearance was regarded as the last step in Katts v Caelers (1966) QD R 482, 484.

“There is no reason why such proceedings taken by the opposing parties should not be taken into account, (Bain Dawes (Qld) Pty Ltd v Hill [1980] No 4499; Senior Master Lee QC, 27 June 1986, unreported).  The purpose of the rule is clearly to allow the Court to exercise some control over an action if it has been dormant for a lengthy period; and that position will not have existed where there has been some proceeding by any party during that period.”

Despite that decision, the proceedings brought by the first and second defendants on 28 February 2000 do not assist the plaintiff because it consisted of an application to dismiss the plaintiff’s claim for want of prosecution and again, do not constitute a “step in the proceeding”.

Consequently, I must find that the plaintiff is in breach of Rule 389 both in failing to give a notice of intention to proceed and in failing to obtain leave of this Court to proceed in the action, no step having been taken in the proceeding for more than two years.  Moreover, the failure of the plaintiff to obtain leave to proceed initially against the third defendant has the result that no valid action existed between him and that defendant.  S 440D of the Corporations Law provides specifically:

“During the administration of a company, a 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 administrator’s written consent; or (b) with the leave of the Court and in accordance with such terms, (if any) as the Court imposes.”

While it is possible to obtain leave nun pro tunc after the commencement of an action against a company in liquidation or a deregistered company, in the absence of such an application the action is not validly instituted.  Consequently, upon the filing of a Notice of Discontinuance as against the first and second defendants, in April 2000, it seems to me that the plaintiff’s action came to an end.  Consequently this application cannot succeed and indeed, cannot even be considered.

As contended by counsel for the respondent, it remains open to the plaintiff to start de novo and bring action directly against the present respondent.  As I indicated earlier in this judgement, the relevant limitation period ceased to run as from the date of the winding up of the proposed third defendant and provided that s 601 AG of the Corporations Law is satisfied, the plaintiff may be able to obtain relief, notwithstanding the significant delay which has occurred since he suffered his injuries.

This application must be dismissed.  It would be inappropriate to simply treat the application as one for leave to proceed against the respondent or as an application for determination of a question arising under a statute simply in order to save costs, without the consent of the respondent.  I order that the application be dismissed and further order that the plaintiff pay the respondents costs of and incidental to this application to be taxed.