Hackett v Nambucca Valley Quarries Pty Ltd - [2012] NSWSC 1189

Supreme Court

New South Wales

Medium Neutral Citation: Hackett v Nambucca Valley Quarries Pty Ltd [2012] NSWSC 1189
Hearing dates: 14 September 2012
Decision date: 04 October 2012
Jurisdiction: Equity Division
Before: Gzell J
Decision:
Application dismissed with costs. Hearsay evidence admitted as application interlocutory.

Catchwords: CORPORATIONS - Supervision, Regulation and Correction - application for leave under Corporations Act 2001 (Cth), s 236 to commence proceedings in name of corporate trustee - whether best interests criterion in s 237(2)(c) established - action by beneficiary raising same issues - whether undertaking as to costs of value
EVIDENCE - Admissibility and Relevance - objection to hearsay - whether application under Corporations Act 2001 (Cth), s 236 final or interlocutory
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Australian Securities Commission v AS Nominees Ltd [1995] FCA 1460; (1995) 62 FCR 504
Barnes v Addy (1874) LR 9 Ch App 244
Collie v Merlaw Nominees Pty Ltd [1998] VSC 203
Ehsman v Nutectime International Pty Ltd [2006] NSWSC 887; (2006) 58 ACSR 705
Fay v Moramba Services Pty Ltd [2009] NSWSC 1428
Fiduciary Ltd v Morningstar Research Pty Ltd [2005] NSWSC 442; (2005) 53 ACSR 732
Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423
Hurley v BGH Nominees Pty Ltd (1984) 2 ACLC 497
Licul v Corney [1976] HCA 6; (1976) 180 CLR 213
Maher v Honeysett & Maher Electrical Contractors [2005] NSWSC 859
McEwen v Combined Coast Cranes Pty Ltd [2002] NSWSC 1227; (2003) 44 ACSR 244
McLean v Lake Como Venture Pty Ltd [2003] QCA 562; [2004] 2 Qd R 280
Pope v Butcher (1996) 20 ACSR 37
Robash Pty Ltd v Gladstone Pacific Nickel Pty Ltd [2011] NSWSC 1235; (2012) 86 ACSR 432
Swansson v R A Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313
Talisman Technologies Inc v Qld Electronic Switching P/L [2001] QSC 324
Wood v Links Golf Tasmania Pty Ltd [2010] FCA 570
Young v Murphy [1996] 1 VR 279
Texts Cited: R I Barrett, "Recent Cases", (1985) 59 ALJ 46
Category: Interlocutory applications
Parties: Kenneth John Hackett (Plaintiff)
Nambucca Valley Quarries Pty Limited (Defendant)
Representation: Counsel:
S Reuben (Plaintiff)
M Ashhurst SC with A Smith (Defendant)
Solicitors:
CCS Legal Pty Ltd (Plaintiff)
Falvey Associates Lawyers (Defendant)

File Number(s): SC 2011/349950

Judgment

The plaintiff, Kenneth John Hackett, holds one ordinary share in the defendant, Nambucca Valley Quarries Pty Ltd (NVQ). Robert Charles Laut holds the other share in NVQ and is currently a director of it.

NVQ is the corporate trustee of the Worrell Creek Unit Trust (Unit Trust) and operated a gravel quarry at Macksville, New South Wales.

Mr Hackett resigned as a director of NVQ in November 2003 and was replaced by James Joseph Mainey.

The beneficiaries of the Unit Trust are Hackett Laboratory Services Pty Ltd (HLS) and Saltwater Developments Pty Ltd, a company controlled by Mr Laut. Each beneficiary holds 10 units in the Unit Trust.

By his…

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: [2012] NSWSC 1189
Decision Date: 04 October 2012

CaseChat Overview and Summary

The case of Hackett v Nambucca Valley Quarries Pty Ltd involved a dispute where the applicant sought leave to bring proceedings in the name of a corporate trustee. The applicant was a beneficiary of the corporate trustee and sought to challenge actions taken by the trustee. The High Court was called upon to determine the admissibility of certain evidence and whether the application was final or interlocutory, which would affect the standard of proof required.

The legal issues before the Court included whether the applicant had established the "best interests" criterion under section 237(2)(c) of the Corporations Act 2001 (Cth) to warrant leave to commence proceedings. Additionally, the Court had to consider whether the beneficiary could raise the same issues as the corporate trustee, and whether an undertaking as to the costs would be a suitable condition for granting leave. Another key issue was whether the application was a final or interlocutory matter, which would determine the admissibility of hearsay evidence and the standard of proof.

The Court found that the applicant had not established the "best interests" criterion required for leave to be granted. It was determined that the action by the beneficiary did not meet the threshold set by the statute, as the issues raised were not in the best interests of the corporate trustee. The Court also held that the application was interlocutory in nature, which meant that hearsay evidence was inadmissible unless an exception applied. Given that the standard of proof for interlocutory applications is lower than for final applications, the Court concluded that the applicant had not met the necessary standard.

The Court dismissed the application for leave, finding that the applicant had not demonstrated that the proceedings were in the best interests of the corporate trustee. The Court also noted that the interlocutory nature of the application precluded the admissibility of hearsay evidence, and the applicant had not provided a sufficient basis to overcome this hurdle. The Court did not make any orders regarding costs, as the application was dismissed.

Orders