In the matter of Dungowan Manly Pty Limited [2015] NSWSC 225

In the matter of Dungowan Manly Pty Limited [2015] NSWSC 225

Approval of the proposed compromise and revocation of leave for the McLaughlins to prosecute the derivative action was refused, primarily because there was insufficient evidence that all non-party shareholders would assent to the settlement, and the overwhelming majority of creditors opposed the application.

Parties
First Plaintiff: Adam Farnsworth (in his capacity as liquidator of Dungowan Manly P/L); Second Plaintiff: Dungowan Manly Pty Ltd; First Defendant; First Cross Claimant on First Cross Claim: Patrick David McLaughlin; Second Defendant; Second Cross Claimant on First Cross Claim: Jennifer Therese McLaughlin; Third Defendant; Cross Claimant on Second Cross Claim: Turner Freeman Lawyers; First Cross Defendant: Adam Farnsworth; Second Cross Defendant: Turner Freeman Lawyers; Third Cross Defendant: Loafer Pty Ltd; Fourth Cross Defendant: Peter William Brown; Fifth Cross Defendant: Louise Jane Brown; Sixth Cross Defendant: Garmen Pty Ltd
Jurisdiction
Australia
Judgment Date
11 March 2015
Procedural Posture
Corporations – External Administration – Liquidator's Application / Application for Approval of Compromise and Revocation of Leave to Bring Derivative Action – Dismissed With Costs
Outcome
Application dismissed with costs
Legal Topics
Liquidator's Powers, Derivative Actions, Approval of Compromise, Creditors' Interests
Corporations Law Insolvency Liquidator's Powers Derivative Actions Approval of Compromise Creditors' Interests

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Parties

Adam Farnsworth (in his capacity as liquidator of Dungowan Manly P/L)

First Plaintiff

Dungowan Manly Pty Ltd

Second Plaintiff

Patrick David McLaughlin

First Defendant; First Cross Claimant on First Cross Claim

Jennifer Therese McLaughlin

Second Defendant; Second Cross Claimant on First Cross Claim

Turner Freeman Lawyers

Third Defendant; Cross Claimant on Second Cross Claim

Adam Farnsworth

First Cross Defendant

Turner Freeman Lawyers

Second Cross Defendant

Loafer Pty Ltd

Third Cross Defendant

Peter William Brown

Fourth Cross Defendant

Louise Jane Brown

Fifth Cross Defendant

Garmen Pty Ltd

Sixth Cross Defendant

Procedural Posture

Corporations – External Administration – Liquidator's Application / Application for Approval of Compromise and Revocation of Leave to Bring Derivative Action – Dismissed With Costs

Legal Issues

  1. 1 Whether the liquidator's application for directions and approval of compromise should be granted
  2. 2 Whether leave previously granted to bring a derivative action should be revoked

Ratio Decidendi

Approval of the proposed compromise and revocation of leave for the McLaughlins to prosecute the derivative action was refused, primarily because there was insufficient evidence that all non-party shareholders would assent to the settlement, and the overwhelming majority of creditors opposed the application.

Court Disposition

Application dismissed with costs

Orders

  • Interlocutory process dismissed with costs