Ipswich Markets P/L v Novak

[2008] QCA 229

SUPREME COURT OF QUEENSLAND

CITATION:

Ipswich Markets P/L v Novak  [2008] QCA 229

PARTIES:

IPSWICH MARKETS PTY LTD ACN 098 929 116
(respondent/appellant)
v
ARPAD PAUL NOVAK
(applicant/respondent)

FILE NO/S:

Appeal No 11117 of 2007
SC No 7597 of 2007

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal – Further Order

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

Judgment delivered on 2 May 2008
Further Order delivered on 8 August 2008

DELIVERED AT:

Brisbane

HEARING DATE:

Heard on the papers

JUDGES:

McMurdo P, Muir and  Fraser JJA
Judgment of the Court

ORDER:

Lawrence Michael Cullen and David Stewart Tonkin pay the respondent’s costs of and incidental to the appeal

CATCHWORDS:

PROCEDURE – COSTS – JURISDICTION – PERSONS NOT PARTIES TO PROCEEDINGS – where the respondent seeks an order for costs against the directors of the appellant – where the appellant company was unsuccessful in an appeal against the decision of the primary judge to grant the respondent leave to commence proceedings on behalf of the company against its directors pursuant to s 237 Corporations Act 2001 (Cth) – where the respondents submit that the dispute is in substance, between the directors of the appellant and the respondent – where the directors of the appellant make all relevant decisions on the appellant's behalf and stand to benefit if the appellant succeeds in the litigation – whether it is appropriate to make an order for costs against non-parties

Corporations Act 2001 (Cth), s 237

Burns v State of Queensland & Croton [2007] QCA 240, cited

SOLICITORS:

Cartner Capner as town agent for Strategy Legal for the appellant

Allens Arthur Robinson for the respondent

1. THE COURT: The appellant company was unsuccessful in an appeal from a decision of a Supreme Court judge granting leave to the respondent pursuant to s 237 of the Corporations Act 2001 (Cth) to bring proceedings against the sole directors of the appellant, Lawrence Cullen and David Tonkin. The respondent seeks an order for costs against Messrs Cullen and Tonkin.

1. The respondent was a director of the appellant until August 2003.

1. The shares in the appellant are held by Mr Cullen and Mr Tonkin through entities which they respectively control.  In the derivative proceedings, the respondent seeks to set aside transactions which it is alleged were entered into by Messrs Cullen and Tonkin in breach of their fiduciary duties to the appellant.  There is a related claim for damages.

1. As is submitted on the respondent's behalf, the subject dispute is, in substance, one between Messrs Cullen and Tonkin on the one hand and the respondent on the other.

1. Messrs Cullen and Tonkin made all relevant decisions on the appellant's behalf and stand to benefit if the appellant succeeds in the litigation.  On the hearing of the appeal, the appellant's counsel submitted that the appellant was "plainly insolvent".  The evidence suggests that it is probable that Messrs Cullen and Tonkin are responsible for funding the appellant in litigation.  In fact, Messrs Cullen and Tonkin offered a personal undertaking to the Court with a view to resisting the application at first instance.

1. There is jurisdiction to make the order sought by the respondent[1] and, for the above reasons, the order is appropriate.

   [1]Burns v State of Queensland & Croton [2007] QCA 240 at paragraph 14 and the authorities there cited.

1. It is ordered that Lawrence Michael Cullen and David Stewart Tonkin pay the respondent's costs of and incidental to the appeal.