Lum v M v Developments (Lane Cove) Pty Limited (in liquidation)

In the case of Lum v M v Developments (Lane Cove) Pty Limited (in liquidation), the plaintiffs sought orders against the liquidators of the defendant company, alleging that the liquidators' conduct was unreasonable and had led to the plaintiffs bringing proceedings. The plaintiffs claimed that the liquidators had caused lapse notices to be issued in respect of the plaintiffs' caveats, thereby threatening the sale of properties. The court was required to determine whether the liquidators' conduct was unreasonable and whether the proceedings were brought about by such conduct. Additionally, the court had to consider whether the failure to accept a Calderbank offer was unreasonable, which could result in a departure from the general rule on costs.

The court found that the liquidators had indeed acted unreasonably in issuing the lapse notices, which directly led to the plaintiffs bringing the proceedings. The court also held that the failure to accept the Calderbank offer was unreasonable, as it provided a viable and advantageous settlement for the plaintiffs. This unreasonableness in both the conduct of the liquidators and the rejection of the Calderbank offer warranted a departure from the usual approach to costs. Consequently, the court ordered the liquidators to pay the plaintiffs' costs, which were assessed based on the terms of the Calderbank offer.

This case underscores the importance of liquidators acting reasonably and considering all reasonable settlement offers in the interests of the company and its creditors. The court's decision highlights the potential consequences for liquidators who fail to act in the best interests of the company and its stakeholders, including the imposition of costs. The outcome serves as a reminder of the significance of responsible conduct by liquidators and the need to consider all reasonable settlement offers to avoid unnecessary litigation and costs.