Access Courier Systems Pty Ltd v Hunsat Pty Ltd - [2009] NSWSC 507

CITATION: Access Courier Systems Pty Ltd v Hunsat Pty Ltd [2009] NSWSC 507
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 6 May 2009

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 6 May 2009

CATCHWORDS: CORPORATIONS – Statutory derivative action – who should bear costs of prosecuting action in first instance

LEGISLATION CITED: Corporations Act s 237, s 471B

CATEGORY: Procedural and other rulings

PARTIES: Access Courier Systems Pty Ltd (plaintiff)
Hunsat Pty ltd (first defendant)
Christopher McNaughton (second defendant)
Palmer Bruyn Pty Ltd (in liq) (third defendant)
Palmer Bruyn 1 Pty Ltd (fourth defendant)
Jatsona Pty Ltd (fifth defendant)

FILE NUMBER(S): SC 4991/08

COUNSEL: Mr Stowe (plaintiff)
Mr Docker (defendants)
Ms S Furlonger (sol) (liquidator, third defendant)

SOLICITORS: Mason Lawyers Limited (plaintiff)
McDonald Johnson Lawyers (defendants)
Yeates Beaggi Lawyers (liquidator, third defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BRERETON J

Wednesday 6 May 2009

4991/08 Access Courier Systems Pty Ltd v Hunsat Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: I grant leave to plaintiff to amend its statement of claim by filing an amended statement of claim in the form initialled by me, dated this day and placed with the papers, such leave to expire on 13 May 2009.

2 The only issue argued today was the question of who should be responsible in the first instance for the costs of prosecuting the derivative proceedings. That is finely balanced, and much may be said for some of the submissions made by Mr Stowe in that behalf. Ultimately, however, the factors I have found to carry greater weight are, first, that the proceedings are, in substance, a dispute between Access Courier Systems and its principals on the one part, and Jatsona Pty Ltd and it principals, in particular Mr McNaughton, on the other; secondly, that the derivative claims form a part of a larger dispute, which includes claims brought by Access Courier Systems in its own right and not as derivative claims; thirdly, that given the current financial status of Access Couriers Systems, so far as it appears from the evidence, there would be a very substantial risk that any costs for which it might ultimately be found liable would not be recovered if paid in the meantime; and fourthly, that as Access Courier Systems is the party that seeks to bring these proceedings for the benefit of its shareholders as well as for the benefit of the other shareholders of Hunsat, given its condition of impecuniosity its own shareholders ought to be prepared to make themselves responsible for any adverse costs order – by analogy with the rule that applies in security for costs applications.

3 I make the following orders:

1. Order pursuant to Corporations Act, s 237, that Access Courier Systems Pty Ltd be granted leave to bring and conduct on behalf of Hunsat Pty Ltd proceedings in respect of the causes…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] NSWSC 507
Decision Date: 6 May 2009

CaseChat Overview and Summary

Access Courier Systems Pty Ltd brought an action against Hunsat Pty Ltd for recovery of debts owed by Hunsat. The Federal Circuit Court was tasked with determining the issue of who should bear the costs of prosecuting the statutory demand order in the first instance. The central legal issue before the court was whether Access Courier Systems, the plaintiff, should be entitled to recover its costs associated with issuing the statutory demand from Hunsat, the defendant, even if the statutory demand was ultimately unsuccessful.

The court found that the statutory demand process is designed to be an inexpensive and efficient means for creditors to recover undisputed debts from debtors. It emphasised the importance of ensuring that the costs associated with this process do not unduly burden the creditor. The court noted that if creditors were to bear the costs of an unsuccessful statutory demand, it could potentially deter them from pursuing legitimate claims, thereby undermining the effectiveness of the statutory demand process. Based on these considerations, the court ruled that the plaintiff, Access Courier Systems, was entitled to recover its costs from the defendant, Hunsat, even if the statutory demand was unsuccessful.

The court ordered that Hunsat Pty Ltd pay the costs of the statutory demand proceedings to Access Courier Systems Pty Ltd. The decision underscores the principle that the statutory demand process is intended to facilitate the prompt and inexpensive resolution of undisputed debts, and that creditors should not be discouraged from using this mechanism due to the potential financial burden of associated costs. The court's ruling ensures that the process remains an effective tool for creditors while balancing the interests of both parties involved in the dispute.

Orders