Keyrate Pty Ltd v Hamarc Pty Ltd - [2001] NSWSC 491

Reported Decision:
(2001) 38 ACSR 396

New South Wales

Supreme Court

CITATION: Keyrate P/L v Hamarc P/L & Ors [2001] NSWSC 491

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 3926/00

HEARING DATE(S): 26/03/01

JUDGMENT DATE:
19 June 2001

PARTIES :

KEYRATE PTY LTD (ACN 069 577 877) (Plaintiff)
HAMARC PTY LTD (ACN 063 422 131) (First Defendant)
ALPINE TOURS INTERNATIONAL PTY LTD (ACN 001 900 867) (Second Defendant)
FERDINAND OOSTERHOFF (Third Defendant)
MELISSA OOSTERHOFF (Fourth Defendant)

JUDGMENT OF: Santow J

COUNSEL : M J Slattery, QC/J M Hennessy/A McAvoy (Plaintiff)
M Dempsey (Defendants)

SOLICITORS: ICQ International (Plaintiff)
Turner Freeman (Defendants)

CATCHWORDS: CORPORATIONS — Statutory derivative action — Requirement to bring such proceedings in the Company’s name does not mean that a statement of claim must actually make the company a plaintiff if otherwise inappropriate — In present case appropriate for representative action to be brought by one defendant against others — Satisfaction of conditions in s237(2) — No necessity for derivative actions and personal actions to arise out of the same transactions — here substantial factual overlap in any event — UK cases not followed having regard also to s63 of Supreme Court Act requiring all matters of controversy between the parties to be tried together so as to avoid multiplicity of proceedings — No impediment under Pt 8 r2 as statutory provision prevails.

LEGISLATION CITED: Corporations Law Pt 2F, 1A; Pt 8 r2; s233; s236; s237
Supreme Court Act 1970 s63

CASES CITED: Foss v Harbottle (1843) 67 ER 189
Spokes v Grosvenor Hotel Co Ltd (1897) 2 QB 124
Stroud v Lawson [1898] 2 QB 44 and Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229 revd [1982] Ch 204 (Court of Appeal)

DECISION: Leave granted to bring statutory derivative action but pleadings to be clarified.

IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J
No. 3926/00

KEYRATE PTY LTD (ACN 069 577 877)
Plaintiff

HAMARC PTY LTD (ACN 063 422 131)
First Defendant
ALPINE TOURS INTERNATIONAL PTY LTD (ACN 001 900 867)
Second Defendant
FERDINAND OOSTERHOFF
Third Defendant
MELISSA OOSTERHOFF
Fourth Defendant

JUDGMENT

Introduction

1 The new statutory derivative action, contained in Pt 2F, 1A of the Corporations Law, is the subject of these proceedings.

2 The Plaintiff, Keyrate Pty Limited, seeks leave to add additional plaintiffs and additional defendants to these proceedings, to amend its summons and for leave to proceed by way of statement of claim. The proposed amendments, if allowed, will include claims for relief on behalf of two companies who are not controlled by the Plaintiffs. The making of the proposed amendments will therefore involve consideration of whether leave to bring proceedings in the name of these two companies should be granted under s237 of the Corporations Law.

3 The principal contest on this application relates first to certain procedural issues concerning the proposed amended summons and statement of claim. Second, whether the pre-conditions for leave under s237 of the Corporations Law have been satisfied, as…

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: [2001] NSWSC 491
Decision Date: 19 June 2001

CaseChat Overview and Summary

The case of Keyrate Pty Ltd v Hamarc Pty Ltd involved a dispute between two companies, Keyrate and Hamarc. The issue before the court was whether a statutory derivative action could be brought by one defendant against other defendants in circumstances where the company itself was not considered an appropriate plaintiff. The matter was heard in the Supreme Court, which was required to determine the legal issues surrounding the bringing of such derivative proceedings.

The court needed to decide whether the requirement to bring statutory derivative proceedings in the name of the company meant that the company itself must be made a plaintiff in all circumstances, or whether it was permissible for a representative action to be brought by one defendant against others. Additionally, the court had to consider whether the conditions in section 237(2) of the relevant legislation were satisfied, and whether it was necessary for derivative and personal actions to arise from the same transactions. The court also had to address the applicability of UK cases in this context, taking into account section 63 of the Supreme Court Act which requires all matters of controversy between the parties to be tried together to avoid multiplicity of proceedings.

In reaching its decision, the court found that it was not necessary for the company itself to be made a plaintiff in a statutory derivative action if that was otherwise inappropriate. The court held that in this case, it was appropriate for a representative action to be brought by one defendant against others. The court also determined that the conditions in section 237(2) were satisfied, and that there was no requirement for derivative and personal actions to arise out of the same transactions, given the substantial factual overlap in any event. The court chose not to follow UK cases on the matter, given the specific requirements of section 63 of the Supreme Court Act, which necessitated the trial of all matters of controversy between the parties together. The court concluded that there was no impediment under Part 8 Rule 2 of the relevant legislation, as the statutory provision prevailed.

The court's final orders were that it was permissible for a representative action to be brought by one defendant against others in this case, and that the statutory derivative action could proceed accordingly.

Orders