Transmetro Corporation Ltd v Kol Tov Pty Ltd

The case of Transmetro Corporation Ltd v Kol Tov Pty Ltd involved a statutory derivative action brought by a director of the plaintiffs, Kol Tov Pty Ltd, on behalf of Transmetro Corporation Ltd. The director sought leave to bring a second cross-claim in existing proceedings where Transmetro Corporation Ltd was a defendant. The legal issue before the court was whether the applicant, as a director of the plaintiffs, could be permitted to bring the cross-claim when it was inherently inconsistent with the position the director was bound to contend for as a director of the plaintiffs.

The court held that the applicant's role as a director of the plaintiffs imposed a duty to advocate for the plaintiffs' interests, which was inherently at odds with the position sought to be established through the proposed cross-claim. The court found that there was a conflict of duties, and it was not in the best interests of Transmetro Corporation Ltd for the director to have leave to bring the cross-claim. The application was deemed not to be objectively in good faith due to the inherent conflict between the director's duties to the plaintiffs and the proposed action on behalf of Transmetro Corporation Ltd. Consequently, the application for leave was dismissed.