Hua and Song v Tuckerman - [2016] NSWSC 1431

Supreme Court

New South Wales

Medium Neutral Citation: Hua and Song v Tuckerman & Ors [2016] NSWSC 1431
Hearing dates: 26 September 2016
Decision date: 27 September 2016
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court orders that the Amended Notice of Motion be dismissed. The First and Second Defendants pay the Plaintiffs’ costs of and incidental to the Amended Notice of Motion as agreed or as assessed.

Catchwords: CORPORATIONS — Liquidation — Derivative action — where the defendants applied for grant of leave under Court’s inherent jurisdiction to represent company and its subsidiaries for purposes of bringing claims against various parties – whether proposed derivative action exhibits such a degree of merit as to be neither vexatious or oppressive – whether liquidator of company opposes commencement of derivative action – whether liquidator and company are financially protected by means of indemnity.
PROCEDURE — Costs — Order for costs on indemnity basis – where plaintiffs sought indemnity costs in respect of paragraphs of defendants’ notice of motion in which defendants sought to bring claims against third parties with no connection to plaintiffs – where defendants were self-represented litigants – whether indemnity costs ought to be granted.
PROCEDURE — Costs — where defendants’ amended notice of motion was dismissed – where plaintiffs sought an order for costs forthwith against defendants –whether costs should be payable forthwith in circumstances where delay in final determination of proceedings was in part due to plaintiffs’ amendment of their pleadings.
Legislation Cited: - Civil Procedure Act 2005 (NSW), ss 98, 236, 237
- Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 42.5
Cases Cited: - Aliprandi v Griffith Vintners Pty Limited (in liq) (1991) 6 ACSR 250
- Brightwell v RFB Holdings Pty Limited (in liq); [2003] NSWSC 7; (2003) 44 ACSR 186
- Carpenter v Pioneer Park Pty Limited [2008] NSWSC 551; (2008) 71 NSWLR 577
- Hu v PS Securities Pty Ltd (as trustee of the Joseph Family Trust) [2011] NSWSC 303
- Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 64; (2014) 97 ASCR 581
- Scarel Pty Ltd v City Loan & Credit Corporation Pty Ltd (1988) 6 ACLC 213
- Cadima Express Pty Ltd (in liq) v Deputy Commissioner of Taxation [1999] NSWSC 1143; (1999) 33 ACSR 527
- Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248
- Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324
- Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131
- Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1
- Brasington v Overton Investments Pty Ltd [2001] FCA 571
- Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727; (2009) 257 ALR 503
Category: Procedural and other rulings
Parties: Xiao Ping Hua (First Plaintiff/First Cross-Defendant)
Lu Sheng Song (Second Plaintiff/Second Cross-Defendant)
Michael Shane Tuckerman (First…

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: [2016] NSWSC 1431
Decision Date: 27 September 2016

CaseChat Overview and Summary

The plaintiffs, Hua and Song, brought a derivative action against the defendants in relation to alleged breaches of director’s duties. The defendants sought leave under the Court’s inherent jurisdiction to represent the company and its subsidiaries for the purposes of bringing claims against various parties. The liquidator of the company opposed the commencement of the derivative action. The plaintiffs sought indemnity costs in respect of certain paragraphs of the defendants’ notice of motion, as well as an order for costs forthwith against the defendants. The legal issues were whether the proposed derivative action exhibited such a degree of merit as to be neither vexatious or oppressive, whether the liquidator and the company were financially protected by means of indemnity, and whether indemnity costs and an order for costs forthwith were appropriate in the circumstances.

The Court found that the proposed derivative action did exhibit a degree of merit and was not vexatious or oppressive. The Court also found that the liquidator and the company were financially protected by means of indemnity. The Court refused to grant indemnity costs in respect of certain paragraphs of the defendants’ notice of motion as the defendants were self-represented litigants and the plaintiffs had no connection to the third parties mentioned in those paragraphs. The Court found that the defendants’ amended notice of motion was dismissed, and while the plaintiffs had amended their pleadings, the delay in the final determination of the proceedings was in part due to the plaintiffs’ amendment. Therefore, the Court ordered that costs be payable forthwith against the defendants.

The Court found that the liquidator and the company were financially protected by means of indemnity, and that the proposed derivative action exhibited a degree of merit and was not vexatious or oppressive. The Court refused to grant indemnity costs in respect of certain paragraphs of the defendants’ notice of motion, as the plaintiffs had no connection to the third parties mentioned in those paragraphs. The Court also found that while the plaintiffs had amended their pleadings, the delay in the final determination of the proceedings was in part due to the plaintiffs’ amendment. Therefore, the Court ordered that costs be payable forthwith against the defendants.

Orders