Charlton v Baber [2003] NSWSC 745

Charlton v Baber [2003] NSWSC 745

A comprehensive fiduciary duty is not owed by a director to an individual shareholder except in particular and circumscribed circumstances of reliance or vulnerability, not present or pleaded here. The plaintiff's pleadings asserting such a duty were struck out for disclosing no reasonable cause of action. The Court granted the plaintiff leave under s.237 Corporations Act 2001 (Cth) to bring derivative proceedings on behalf of the company but only in respect of certain claims for which the statutory criteria were satisfied.

Parties
Plaintiff: Shane Edward Charlton; First Defendant: Mark Steven Baber; Second Defendant: Elizabeth Joan Baber; Third Defendant: Neville Baber; Fourth Defendant: Newcastle Auto Air Pty Limited (in liq); Sixth Defendant: Griffiths Road Pty Limited
Jurisdiction
Australia
Judgment Date
15 August 2003
Procedural Posture
Equity Corporations Interlocutory Applications / Interlocutory Judgment on Strikeout and Application for Leave to Bring Derivative Proceedings
Outcome
Claims of plaintiff personally against first defendant struck out. Leave for plaintiff to bring derivative proceedings on behalf of fourth defendant granted as to some claims and refused as to others.
Legal Topics
Duties of Directors, Statutory Derivative Action, Fiduciary Duties, Leave to Proceed Against Company in Liquidation, Striking Out Pleadings, Oppression Remedy
Corporations Law Equity Duties of Directors Statutory Derivative Action Fiduciary Duties Leave to Proceed Against Company in Liquidation Striking Out Pleadings Oppression Remedy

Case Brief

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Parties

Shane Edward Charlton

Plaintiff

Mark Steven Baber

First Defendant

Elizabeth Joan Baber

Second Defendant

Neville Baber

Third Defendant

Newcastle Auto Air Pty Limited (in liq)

Fourth Defendant

Griffiths Road Pty Limited

Sixth Defendant

Procedural Posture

Equity Corporations Interlocutory Applications / Interlocutory Judgment on Strikeout and Application for Leave to Bring Derivative Proceedings

Legal Issues

  1. 1 Whether a director owes a comprehensive fiduciary duty to an individual shareholder
  2. 2 Whether leave should be granted for statutory derivative action under s.237 Corporations Act 2001 (Cth) when company is in liquidation
  3. 3 Whether the plaintiff's amended statement of claim discloses a reasonable cause of action

Ratio Decidendi

A comprehensive fiduciary duty is not owed by a director to an individual shareholder except in particular and circumscribed circumstances of reliance or vulnerability, not present or pleaded here. The plaintiff's pleadings asserting such a duty were struck out for disclosing no reasonable cause of action. The Court granted the plaintiff leave under s.237 Corporations Act 2001 (Cth) to bring derivative proceedings on behalf of the company but only in respect of certain claims for which the statutory criteria were satisfied.

Court Disposition

Claims of plaintiff personally against first defendant struck out. Leave for plaintiff to bring derivative proceedings on behalf of fourth defendant granted as to some claims and refused as to others.

Orders

  • Paragraphs 6, 16 to 20, 21 to 29, 57 to 70, 107 to 111, 112 and 113 of the amended statement of claim struck out.
  • Plaintiff granted leave under s.237 Corporations Act to bring proceedings on behalf of fourth defendant upon causes of action in paragraphs 76 to 81 and 90 to 106 (with paragraph 6A) of the amended statement of claim.