In the matter of Das Schneider Pty Ltd [2023] NSWSC 1529

In the matter of Das Schneider Pty Ltd [2023] NSWSC 1529

The Court held that the Company, apparently under Mr Chan's control, acted so unreasonably in defending and extending a straightforward s 247A inspection application by introducing an interlocutory attack on the Plaintiffs' shareholding, delaying the proceedings until the Company entered administration and liquidation, and causing wasted costs, that the default position under UCPR r 42.20 should be displaced. Mr Chan offered no explanation for the Company's conduct or insolvency and had a substantial interest in the defence of the proceedings as a shareholder. Those circumstances brought the case within the narrow class where a non-party costs order against a director was justified.

Jurisdiction
Australia
Judgment Date
04 December 2023
Procedural Posture
Notice of Motion for Non Party Costs Order in Equity Corporations List Proceedings Concerning Inspection of Company Books Under S 247 a of the Corporations Act 2001 (cth) / After the Substantive Proceedings Were Dismissed as Having No Continuing Utility Following the Company's Liquidation and Production of Documents by the Liquidator
Outcome
Notice of Motion granted; Mr Ka Kan Chan ordered to pay the Plaintiffs' costs of the proceedings, including the costs of the non-party costs application, as agreed or assessed.
Legal Topics
['non Party Costs Order' 'costs After Dismissal of Proceedings' 'inspection of Company Books' 'director Controlled Company Litigation' 'voluntary Administration and Liquidation']
['civil Procedure' 'corporations'] ['non Party Costs Order' 'costs After Dismissal of Proceedings' 'inspection of Company Books' 'director Controlled Company Litigation' 'voluntary Administration and Liquidation']

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Procedural Posture

Notice of Motion for Non Party Costs Order in Equity Corporations List Proceedings Concerning Inspection of Company Books Under S 247 a of the Corporations Act 2001 (cth) / After the Substantive Proceedings Were Dismissed as Having No Continuing Utility Following the Company's Liquidation and Production of Documents by the Liquidator

Legal Issues

  1. 1 ['Whether the default position under r 42.20 of the Uniform Civil Procedure Rules 2005 (NSW) should be displaced and costs ordered in favour of the Plaintiffs despite dismissal of the proceedings.' 'Whether a costs order could be made where there had been no determination of the proceedings on the merits.' "Whether the circumstances justified a non-party costs order against Mr Chan as a director who caused or controlled the Company's defence of the proceedings."]

Ratio Decidendi

The Court held that the Company, apparently under Mr Chan's control, acted so unreasonably in defending and extending a straightforward s 247A inspection application by introducing an interlocutory attack on the Plaintiffs' shareholding, delaying the proceedings until the Company entered administration and liquidation, and causing wasted costs, that the default position under UCPR r 42.20 should be displaced. Mr Chan offered no explanation for the Company's conduct or insolvency and had a substantial interest in the defence of the proceedings as a shareholder. Those circumstances brought the case within the narrow class where a non-party costs order against a director was justified.

Court Disposition

Notice of Motion granted; Mr Ka Kan Chan ordered to pay the Plaintiffs' costs of the proceedings, including the costs of the non-party costs application, as agreed or assessed.

Orders

  • ["Mr Ka Kan Chan pay the Plaintiffs' costs of the proceedings, including the Plaintiffs' costs of its application for a non-party costs order, as agreed or as assessed." 'The exhibits be returned.']