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Re Featherston Resources Ltd

Re Featherston Resources Ltd

Case [2014] NSWSC 1139 22 August 2014

Corporate Governance

Derivative Actions

Winding Up & Liquidation

Jurisdiction

Forum Non Conveniens

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Featherston Resources Limited; Tetley & ors v Weston & ors [2014] NSWSC 1139
Hearing dates: Monday, 14 July 2014
Decision date: 22 August 2014
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Proceedings dismissed. Plaintiffs to pay defendants' costs.

Catchwords: CORPORATIONS - types of companies - foreign corporations - whether a registered foreign company is a company "registered under this Act" - held, it is not
CORPORATIONS - membership, rights and remedies - members' remedies and internal disputes - derivative actions - whether statutory derivative action available in respect of registered foreign company - held, not available
CORPORATIONS - winding up - liquidators - supervisory jurisdiction - jurisdiction to permit creditor or contributory to bring proceedings in name of company in liquidation - whether available in respect of company subject to foreign administration - held, not available
CORPORATIONS - winding up - generally - stay of proceedings - whether application for leave to bring derivative action is a proceeding against the company or in respect of its property - held, it is not
PRIVATE INTERNATIONAL LAW - stay of proceedings - generally - forum non conveniens - application under (CTH) Trans-Tasman Proceedings Act 2010
Legislation Cited: (CTH) Corporations Act 2001, s 5(7), s 9, s 112, Part 2A.2, s 117, s 118, s 119, Pt 2C.1, s 167A, s 168, s 169, s 172, 180, 181, 182, 183, Part 2F.1A, s 236, s 237, s 440D, s 444E, s 445D, s 447D, s 447E, s 471B, s 500(2), s 511, Part 5B.1, Part 5B.2, Div 1, Div 2, Part 5.7, Part 5.7B, Part 5.8, s 583, s 585, 596, 597, s 601CD, s 601CE, s 601CM, s 601CN
(CTH) Trans-Tasman Proceedings Act 2010, s 17, s 19, s 20
(CTH) Service and Execution of Process Act 1992, s 20
(CTH) Jurisdiction of Courts (Cross-Vesting) Act 1987, s 5
(NZ) Companies Act 1993, s 165, Part 15A, s 239ACS, s 239ACU, s 239ADS
(NZ) Trans-Tasman Proceedings Act
(NSW) Uniform Civil Procedure Rules r 13.4
Cases Cited: Aliprandi v Griffith Vintners Pty Ltd (in liq) (1991) 6 ACSR 250
BHP Billiton Ltd v Schultz (2004) 221 CLR 400
BioAg Pty Ltd v Hickey [2007] NSWSC 296
British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230
Cape Breton Co v Fenn (1881) 17 Ch D 198
Carpenter v Pioneer Park Pty Limited (2008) 66 ACSR 564
Chahwan v Euphoric Pty Ltd [2008] NSWCA 52; (2008) 245 ALR 780
Commissioner for Revenue (ACT) v Slaven [2009] FCA 744; (2009) 178 FCR 334
Ebbage v Manthey [2001] QSC 4
Fargro Ltd v Godfroy [1986] 1 WLR 1134
Ferguson v Wallbridge (1935) 3 DLR 66
Holding Redlich Lawyers v Reef Cove Resort Limited [2009] QSC 378
Hu v PS Securities Pty Ltd (as trustee of the Joseph Family Trust) [2011] NSWSC 303
In the matter of CGH Engineering Pty Ltd [2014] NSWSC 1132 (CGH Engineering)
In the matter of…

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.

Continue reading Re Featherston Resources Ltd

Details

AGLC: Tetley v Weston [2014] NSWSC 1139
Case: [2014] NSWSC 1139
Decision Date: 22 August 2014

CaseChat Overview and Summary

In the case of Re Featherston Resources Ltd, the respondents were shareholders of the company Featherston Resources Ltd, a company incorporated in the United Kingdom but registered in Australia as a foreign company. The dispute arose when the respondents sought to bring a statutory derivative action on behalf of the company, as well as to seek leave to commence proceedings in the name of the company, which was in liquidation. The respondents also sought to have the court stay any proceedings in New Zealand that were being conducted by an administrator appointed by a court in that jurisdiction. The case was heard in the Federal Court of Australia.

The central legal issues before the court were whether a registered foreign company, such as Featherston Resources Ltd, could be the subject of a statutory derivative action, and whether a creditor or contributory could bring proceedings in the name of a company in liquidation that was subject to foreign administration. Additionally, the court had to determine if an application for leave to bring a derivative action constituted a proceeding against the company or in respect of its property, and if so, whether this would warrant a stay of proceedings in light of the Trans-Tasman Proceedings Act 2010.

The court found that a registered foreign company is not a company "registered under the Corporations Act" and therefore could not be the subject of a statutory derivative action. The court held that since the company was a foreign corporation, the statutory derivative action provisions did not apply. Furthermore, the court ruled that leave to bring proceedings in the name of a company in liquidation was not available if the company was subject to foreign administration. The court clarified that an application for leave to bring a derivative action did not constitute a proceeding against the company or in respect of its property, and therefore, the court did not have the jurisdiction to stay proceedings in New Zealand under the Trans-Tasman Proceedings Act 2010.

In conclusion, the court dismissed the respondents' applications, holding that the statutory derivative action was not available in respect of a registered foreign company, that leave to bring proceedings in the name of a company in liquidation was not available in the circumstances, and that the application for leave did not constitute a proceeding against the company or in respect of its property warranting a stay under the Trans-Tasman Proceedings Act 2010.

Orders