ResCom Lawyers Pty Ltd v Dangerfield - [2011] VSC 469

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT
LIST E

No. SCI 2010 05735

RESCOM LAWYERS PTY LTD
(ACN 133 519 892)

Plaintiff

STEVEN PETER DANGERFIELD

SIMON CHARLES EXLEY

DANGERFIELD EXLEY LAWYERS PTY LTD (ACN 140 129 166)

Defendants

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JUDGE:	FERGUSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	19 August 2011
DATE OF JUDGMENT:	21 September 2011 (Revised 26 September 2011)
CASE MAY BE CITED AS:	ResCom Lawyers Pty Ltd v Dangerfield & Ors
MEDIUM NEUTRAL CITATION:	[2011] VSC 469

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CORPORATIONS – Incorporated legal practice - Where two directors left practice and completed conveyancing files following their departure – ‘Exit’ proposal previously provided to third director – Applicant director seeking payment for his interest in the business – Proceedings alleging breach of directors’ duties and seeking compensation - Statutory derivative action – Leave required to commence proceedings – Whether Court has jurisdiction to grant leave nunc pro tunc – Whether applicant acting in good faith – Whether in best interests of Company that leave be granted – Whether there is a serious question to be tried - Corporations Act 2001 (Cth) ss 236, 237.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Styring	Robert James
For the Defendants	Mr J.D. Catlin	Harwood Andrews Lawyers

TABLE OF CONTENTS

Introduction and parties................................................................................................................... 2

Requirements for leave..................................................................................................................... 2

The history of ResCom Lawyers and the dispute........................................................................ 3

What did Mr Matthews know about the conduct of Mr Dangerfield and Mr Exley?.......... 6

Is Mr Matthews acting in good faith?............................................................................................. 7

Is granting leave to Mr Matthews in the best interests of the Company?............................... 8

Is there a serious question to be tried?......................................................................................... 12

Conclusion......................................................................................................................................... 17

HER HONOUR:

Introduction and parties

The plaintiff, ResCom Lawyers Pty Ltd, (“the Company”) carried on business as an incorporated legal practice under the Legal Profession Act2004 (Vic). Bradley James Matthews and the first two defendants, Steven Peter Dangerfield and Simon Charles Exley, were and are directors and shareholders in the Company. Mr Matthews alleges that Mr Dangerfield and Mr Exley transferred the legal practice away from the Company, ultimately to the third defendant, Dangerfield Exley Lawyers Pty Ltd. Mr Matthews alleges that the transfer was without authority and without payment being made to the Company. Mr Matthews has applied under s 237 of the Corporations Act 2001 (Cth) for leave (with retrospective effect) to bring the proceeding on behalf of the Company.

Requirements for leave

As a shareholder and officer of the Company, Mr Matthews is entitled to bring a proceeding on its behalf if leave is granted under s 237 of the Corporations Act.[1] Section 237(2) provides that the Court must grant the application for leave if it is satisfied that:
[1]Section 236(1)(a) Corporations Act.

“(a)it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for steps in them; and
(b)the applicant is acting in good faith; and
(c)it is in…

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: [2011] VSC 469
Decision Date: 21 September 2011 (Revised 26 September 2011)

CaseChat Overview and Summary

The case of ResCom Lawyers Pty Ltd v Dangerfield involved a dispute among directors of an incorporated legal practice. Two of the directors left the practice, taking their conveyancing files with them. The remaining director, who brought the proceedings, alleged that the departing directors breached their duties by not properly completing the files and sought payment for his interest in the business. The matter was heard in the Federal Court of Australia.

The primary legal issues the court addressed were whether the Court had jurisdiction to grant leave nunc pro tunc to commence the statutory derivative action and whether the applicant was acting in good faith and if it was in the best interests of the company for leave to be granted. Additionally, the court needed to determine whether there was a serious question to be tried regarding the alleged breaches of directors' duties.

The court held that it did have the jurisdiction to grant leave nunc pro tunc under section 237 of the Corporations Act 2001. It found that the applicant was acting in good faith and that it was in the best interests of the company for leave to be granted. The court concluded that there was a serious question to be tried concerning the alleged breaches of directors' duties. Consequently, the applicant was granted leave to commence the statutory derivative action.

The final orders included granting the applicant leave to commence the statutory derivative action and directing the parties to attend a case management conference to determine the appropriate course of action for the proceedings.

Orders