FEDERAL COURT OF AUSTRALIA Lucky v Ives (No 2) [2024] FCA 970 File number: NSD 1483 of 2023 Judgment of: JACKMAN J Date of judgment: 22 August 2024 Catchwords: CORPORATIONS – application to vary orders granting leave to take steps to defend proceedings on behalf of company – whether solicitor acting for company should be substituted – whether order should be varied to provide Mr Ives rather than Mr Lucky with leave to provide instructions Legislation: Corporations Act 2001 (Cth) s 237 Cases cited: Lucky v Ives [2023] FCA 1571 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 9 Date of hearing: 22 August 2024 Counsel for the Plaintiff: Mr T O'Brien and Mr H Rogers Solicitor for the Plaintiff: Polczynski Robinson Counsel for the First Defendant: Mr Andrew W Smith Solicitor for the First Defendant: Resolve Litigation Lawyers ORDERS NSD 1483 of 2023 BETWEEN: UTAARIKI MAVE LUCKY Plaintiff AND: BEN IVES First Defendant CHIEF TRADE CREDIT INSURANCE PTY LTD (ACN 114 867 033) Second Defendant order made by: JACKMAN J DATE OF ORDER: 22 August 2024 THE COURT ORDERS THAT: 1. Order 2 made on 8 December 2023 be varied so as to grant leave to the plaintiff, pursuant to s 237 of the Corporations Act 2001 (Cth): (a) to appoint Samantha Peterson of McLachlan Thorpe Partners as solicitor for the second defendant (Company) on behalf of the Company in both of the Federal Court proceedings numbered NSD1063/2021 and NSD919/2022 (together, the Marketlend Proceedings); (b) to instruct Samantha Peterson of McLachlan Thorpe Partners to engage counsel, or to continue to engage existing counsel, on behalf of the Company; and (c) until further order to give instructions to Samantha Peterson of McLachlan Thorpe Partners concerning the conduct of Chief's defence of and the making and conduct of any cross-claims in the Marketlend Proceedings. 2. Pursuant to s 242 of the Corporations Act 2001 (Cth), the Company pay: (a) the reasonable costs and expenses incurred in relation to the steps taken in accordance with order 2, made on 8 December 2023, as varied by these orders; (b) the amount of $60,000 into the trust account of McLachlan Thorpe Partners on account of anticipated costs and expenses. 3. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), until further order, there be no publication or other disclosure of paras 10–13 of the second affidavit of Richard Alexander Lyne, dated 21 August 2024, and its annexures marked A and B, and annexures BI-5, 9, 10, 22, 27, and 29 to the affidavit of Ben John Ives, affirmed on 13 August 2024, and annexures HCH-4, 6, 11, and 17 to the affidavit of Hugo Chisholm Hosie of 21 August 2024, other than between the parties to these proceedings, their legal representatives and the Court. 4. The hearing of paragraph 6 of the first defendant's interlocutory application be stood over to 9.30 am on 10 September 2024. 5. Each party pay its own costs of the first defendant's interlocutory application, except for costs incurred in relation to paragraph 6, which I will determine on 10 September 2024. 6. The first defendant's interlocutory application otherwise be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT Delivered ex tempore, revised from transcript JACKMAN J: 1 On 8 December 2023, I made orders granting the plaintiff (Mr Lucky), one of two directors for the second defendant (Chief) leave pursuant to s 237 of the Corporations Act 2001 (Cth) to engage Polczynski Robinson to act for Chief in defence of Federal Court proceedings NSD1063/2021 (the Marketlend Proceeding) and, until further order, to provide instructions to Polczynski Robinson in relation to the conduct of those proceedings: Lucky v Ives [2023] FCA 1571. The first defendant (Mr Ives) now seeks to have the Court set aside some of those orders and make varied orders. 2 It is common ground that some variation is appropriate. Since the grant of leave, Chief have been joined as a respondent to proceedings NSD919/2022 (the Sealoud Proceeding) which raised overlapping issues to the Marketlend Proceeding. Polczynski Robinson is unable to act for Chief in the Sealoud Proceeding due to a conflict. Mr Lucky accepts that: (i) the grant of leave under s 237 should be extended to include the Sealoud Proceeding; (ii) Ms Samantha Peterson of McLachlan Thorpe Partners should act for the company in both proceedings; and (iii) a total of $60,000 should be paid into the trust account of McLachlan Thorpe Partners on account of its anticipated costs. 3 Two matters are in dispute. The first disputed matter is whether the order should be varied to provide Mr Ives rather than Mr Lucky with the leave to provide instructions on behalf of Chief in relation to the proceeding. The Marketlend Proceeding relevantly involves claims against Chief in relation to advice and representations alleged to have been given and made to a client, Marketlend Pty Ltd, in relation to a trade credit insurance placed by Chief. Mr Lucky was Marketlend's insurance broker, and accordingly, it appears to me that only Mr Lucky is in a position to give full and proper instructions about these matters (see the affidavit of Richard Lyne, affirmed 21 August 2024 at paras 22–30). 4 While much of the material may be documentary, it seems to me likely that instructions will be required on matters which are not specifically addressed in the documents. Given the irretrievable breakdown in the relationship between Mr Ives and Mr Lucky (as to which, see Mr Lyons's affidavit at para 31), it is not realistic that Mr Ives will obtain the necessary information from Mr Lucky. Contrary to the first defendant's submissions, I do not regard the evidence as disclosing any unreasonable or inefficient conduct of the Marketlend Proceeding to date on the instructions of the plaintiff. 5 The second disputed matter is whether my order that Mr Ives pay Mr Lucky's costs of and incidental to the hearing on 8 December 2023 should be varied. In general, such an order should not be set aside or varied unless there is shown to have been a material change in circumstances since the original order was made or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application. The first defendant wishes to be given further time to analyse some recently received material in order to ascertain whether such circumstances can be established or whether there is some other basis on which an application might be brought to vary or set aside that costs order. 6 It seems to me that the first defendant should be given an opportunity to do so, and I am informed by counsel for both parties that 9.30 am on 10 September is a suitable and convenient date for any hearing on that application in relation to costs if it is to be pressed. 7 I note also that Mr Lucky has filed an application under s 461 for an order that Chief be wound up on the just and equitable ground. As the plaintiff submits, if that application is successful, the further conduct of both proceedings will, if leave is given to proceed against Chief, be a matter for the liquidator. 8 I also note that there is a typographical error in my judgement of 8 December 2023, in that the word "reasonable" in the third line of para 12 should read "unreasonable". 9 As to the costs of today, I regard each party as having achieved a measure of success and I regard their legal representatives as having collaborated in a commendable way to the extent that they have been able to do so, notwithstanding the personal difficulties between their respective clients. It seems to me that the appropriate order is that each party bear its own costs of the interlocutory application, except for costs in relation to para 6, which I will determine on 10 September 2024. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman. Associate: Dated: 26 August 2024