Oral agreement licks bid to shift solar stoush

Solar stoush not easy to shiftLiquidators don't always have it their way when trying to move proceedings to a different court.
David Lombe's stoush with solar cell maker Massive Solar is hotting up.

Deloitte’s David Lombe: bid to shift litigation to Victoria fails.

A bid by Deloitte pair David Lombe and Robert Woods to transfer their stoush with solar cell installer Massive Solar (MS) from Sydney to Melbourne has failed after a judge concluded that “the interests of justice require that the proceedings continue in this Court.”

Lombe and Woods were appointed liquidator to Inverter Solar (IS) by order of the Supreme Court of Victoria on July 13, 2016. Their appointment followed an application to have IS wound up made by Chinese solar cell manufacturer, Dortmund Energy.

According to the judgment of the NSW Supreme Court’s Justice Guy Parker things went thermo two weeks later after the liquidators had the locks changed at a premises in Silverwater, NSW.

“These proceedings were commenced on the following day, 28 July, by the filing of a summons naming MS as plaintiff and the liquidators as the defendants. On that day, orders were also obtained ex parte preventing the liquidators from interfering with MS’s access to the Silverwater premises,” the judge said.

It transpired that IS had been operating out of the Silverwater premises until July 2015, when it purportedly transferred its principal place of business to the suburb of Burwood in Victoria. Prior to its shift south IS had begun sharing the Silverwater premises with MS, pursuant to what MS told the judge was an “oral licence granted by officers of IS”.

The ex-parte orders were subsequently extended and the proceedings put on a proper footing, with MS claiming that the actions by the liquidators in seeking to, or in taking possession of the premises caused damage, including loss of sales.

MS filed a statement of claim in August and the matter was due to return to the court in November, 2016 but on September 14 lawyers for Lombe and Woods sent a letter of demand to MS.

“That letter asserted various claims by the liquidators on behalf of IS against MS associated with the alleged transfer of IS’s business without consideration being paid; the alleged transfer of stock from IS to MS without proper consideration being given; and a set off between debts owed, or allegedly owed, from MS to IS,” Justice Parker said.

The letter demanded payment of approximately $5.7 million and stated that unless payment was made within seven days, legal proceedings would be commenced without further reference to MS.

On December 6, 2016 Lombe and Woods commenced proceedings against MS in the Victorian Registry of the Federal Court and in April 2017 made an application to the NSW Supreme Court seeking to shift the proceedings MS had commenced to the Federal Court for hearing in Victoria.

Not to be outdone, MS made application in the NSW Supreme Court seeking to have the liquidators’ December 6 Federal Court proceedings transferred to the Federal Court’s registry in NSW, though the judge said it turned out that what it really wanted was to transfer the Federal Court proceedings initiated by the liquidators in Victoria to the Supreme Court in NSW.

“Counsel for the liquidators argued that I should ignore the fact that the proceedings in this Court were commenced first and that I should transfer the proceedings to the Federal Court because the larger part of the dispute is pending there,” Justice Parker mused.

“I accept that I should not privilege MS’s position merely because MS commenced these proceedings first in this Court. But, in my view, if I were to act on the basis which I am invited to act by counsel for the liquidators, I would, in effect, be privileging the liquidators’ choice to bring their claims by way of separate proceedings in the Federal Court in Victoria, rather than by way of cross-claim,” he said.

“In my opinion, the institution of separate proceedings is always apt to result in additional costs being incurred compared with bringing a claim by way of cross-claim in the original proceedings. In those circumstances, having regard to the history that I have set out, the interests of justice require that the proceedings continue in this Court as the first Court to embark on determining the disputes between the parties.

“Accordingly, I must refuse the liquidators’ application for transfer and I see no reason why costs should not follow the event.”

Care to read the judgment? Massive Solar Pty Ltd v Woods [2017] NSWSC 924

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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