In the matter of Three Chimneys Pty Ltd (in liquidation)

Three Chimneys Pty Ltd was in liquidation and a shareholder applied to the Court for leave to bring derivative proceedings against the liquidator, directors, and other parties. The liquidator did not oppose the application if a capped indemnity and security for that indemnity was provided. The shareholder and its directors proposed a higher capped indemnity than that suggested by the liquidator, and the indemnity was limited to the costs of claims prosecuted by the company pursuant to the leave. The shareholder also sought leave to amend its Originating Process to align it with the Points of Claim, in accordance with rule 19.1 of the Uniform Civil Procedure Rules 2005 (NSW).

The primary legal issues before the Court were whether to grant leave to the shareholder to bring derivative proceedings on the terms of the proposed capped indemnity and whether to allow the amendments to the Originating Process. The Court considered whether the shareholder's proposed capped indemnity was sufficient to protect the company's assets and whether the amendments were necessary to clarify the relief sought. The Court also considered the liquidator's position and whether the shareholder's offer of a higher capped indemnity was reasonable.

The Court found that the shareholder's proposed capped indemnity was reasonable and sufficient to protect the company's assets. The Court also found that the amendments to the Originating Process were necessary to clarify the relief sought and to conform it to the Points of Claim. The Court granted leave to the shareholder to bring derivative proceedings on the terms of the proposed capped indemnity and allowed the amendments to the Originating Process.

The Court ordered that leave be granted to the shareholder to bring derivative proceedings against the liquidator, directors, and other parties, subject to the shareholder providing a capped indemnity of $1.25 million and security for that indemnity. The Court also ordered that the amendments to the Originating Process be allowed, and the relief sought be clarified in accordance with the Points of Claim.