Welcome to today’s Chamberlains Selection, where we will discuss with James d’Apice on the matter of Carpenter v Pioneer Park [2008] NSWSC 551. We will talk about a member of a company placed into liquidation who was granted leave to commence a derivative action.

A Co was placed into liquidation. A member was granted leave to commence a derivative action. [1] He did, and the Co lost. [4] He then purported to cause the Co to appeal. [5] He sought a declaration that the original leave extended to running the appeal; or, alternatively, that fresh leave should be granted. [6] A company in liq can’t rely on the Corporations Act for a derivative action. It must rely on the Court’s inherent jurisdiction. [9] The Court found the original leave did not extend to an appeal. [17], [18] There being no existing leave, the Court considered whether leave to appeal ought to be granted; noting the CA could be of no assistance as the Co was in liq.

The Court had to consider (i) whether the appeal was well founded, (ii) the liquidator’s attitude, and (iii) practical issues for the liquidator and Co, like security. [34] On (i) the member did not provide enough evidence to convince the Court. [48] On (ii) the member’s failure to pay a $62K debt and adjourned bankruptcy proceedings added doubt to the value of his indemnity. [53] On (iii) the points considered at (ii) were again relevant. [59] The member’s application failed. Costs followed.