Cadwallader v Bajco (No.2)

The appeal, Cadwallader v Bajco (No.2), involved a dispute between the plaintiff, Cadwallader, and the defendants, Bajco, a director of the company, and the company's voluntary administrators. Cadwallader sought an order that the administrators and the director be held responsible for his costs in terminating a deed of company arrangement. The plaintiff alleged that the administrators were appointed in bad faith and for improper purposes. The administrators, while aware of the improper purpose, were not aware of the bad faith. The appeal was heard in the Supreme Court of New South Wales.

The court was required to decide whether the administrators and the director should be held liable for the plaintiff's costs. It also needed to determine whether the administrators should be prevented from recouping their costs from the company. The primary consideration was whether the administrators were aware of the bad faith in appointing the administrators and whether this affected their ability to recover costs from the company.

The court found that the administrators and the director were indeed on notice of the improper purpose, but not the bad faith. Despite this, they were held liable for the plaintiff's costs due to the improper purpose. The court held that the administrators were not entitled to recoup their costs from the company because they had been appointed for an improper purpose. The court ruled that the administrators could not recover their costs from the company because they had acted in bad faith and for an improper purpose.

The court ordered that the administrators and the director pay the plaintiff's costs and that the administrators be prevented from recouping their costs from the company. The decision was based on the principle that administrators appointed for an improper purpose could not recover their costs from the company, even if they were not aware of the bad faith.