Kordamentha Pty Ltd v LM Investment Management Ltd

Kordamentha Pty Ltd initiated legal proceedings against LM Investment Management Ltd, previously the trustee of two trusts, alleging breaches of fiduciary duty and seeking damages and an indemnity. The dispute centred around resolutions passed and deeds of assignment executed by LMIM, where it assigned loans and securities from one trust to itself as trustee for another trust. The plaintiff claimed that LMIM, acting as trustee for both trusts, breached its duties by placing itself in a position of conflict, and sought liability for the resulting loss. Additionally, the plaintiff sought an indemnity against the first trust and subrogation rights.

The court was tasked with determining whether specific parts of the plaintiff's pleadings should be struck out on the grounds that they did not disclose a reasonable cause of action or had a tendency to prejudice or delay the proceedings. The central issue was whether the claims for indemnity and subrogation were legally tenable based on the facts pleaded.

The court held that the indemnity claim was not entirely without merit and could be amended to potentially disclose a reasonable cause of action. Consequently, the application to strike out the indemnity claim was refused, and the plaintiff was granted leave to amend its pleadings. The court also emphasised the need for the parties to agree on a form of orders to streamline the proceedings.

In summary, the court allowed the plaintiff to amend its claim for indemnity but denied the motion to strike out this part of the pleadings. The court directed the parties to collaborate on drafting appropriate orders to ensure the proceedings move forward efficiently.