Parkston Limited (in liquidation), Application of [2000] NSWSC 764

Reported Decision : (2000) 35 ACSR 114

New South Wales Supreme Court

CITATION : Parkston Limited (in liquidation), Application of [2000] NSWSC 764 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1546/90 HEARING DATE(S) : 09/06/00 JUDGMENT DATE : 3 August 2000

PARTIES : Martin Russell in his capacity as Official Liquidator of Parkston Limited (in liquidation) (Applicant) JUDGMENT OF : Santow J

P Hayes, QC/P Riordan (Tricontinental) COUNSEL : B A Coles, QC (Gibraltar Factors) M Walton, SC/T G R Parker (State Bank of New South Wales/Bank of West Australia) C R C Newlinds (Liquidator Parkston Limited) Middletons Moore & Bevins (Tricontinental) SOLICITORS : Baker & McKenzie (Gibraltar Factors) Blake Dawson Waldron (State Bank of New South Wales/Bank of West Australia) Kemp Strang (Liquidator Parkston Limited) CATCHWORDS : CORPORATIONS — Giving two creditors an advantage over the others under s450 of the Companies (NSW) Code or s564 of the Corporations Law where the two creditors funded risky, complex and expensive litigation — How is risk assessed over continuing period of litigation — Hindsight — Should 100% of the recovered proceeds go to funding creditors or something less — Relevance of one of them withdrawing from a commitment to contribute but continuing to contribute thereafter — Meaning of "indemnity" includes actual contribution whether pre-committed or not — also s450 includes preservation of property being right of action — Relevance of risk of cost order against non-party funders of litigation — Relevance and foreseeability of litigation risk — How and when ascertained — Relevance of the two non-funding creditors not having been asked to fund but generally aware of litigation and standing passively by — no realistic prospect would have funded despite assertions otherwise — All or nothing approach appropriate rather than valuation of a chance — Relevance if at all of other sources of recovery for non-funding creditors — joinder of parties. Companies (NSW) Code 1981 s450 LEGISLATION CITED : Corporations Law s564 Supreme Court Rules Pt 52A r4 Allquip (WA) Pty Ltd v Allan (1998) 16 ACLC 34 Re Cartco (1994) 12 ACLC 766 Re Glenisia Investments Pty Ltd (in liq) (1996) 14 ACLC 237; (1995) 19 ACSR 84 Household Financial Services Pty Ltd v Chase Medical Centre Pty Ltd (in liq) (1995) 13 ACLC 1569; (1995) 18 ACSR 294 Re Ken Godfrey Pty Ltd (1994) 12 ACLC 1,071; (1994) 14 ACSR 610 CASES CITED : Knight v F P Special Assets Ltd (1992) 174 CLR 178 Re Kyra Nominees Pty Ltd (in liq) (1987) 5 ACLC 811 Linter Group Ltd v Goldberg & Ors (1992) 7 ACSR 580 Power Demolitions Pty Ltd v Tosich Construction Pty Ltd (1998) 16 ACLC 410 Sellers v Adelaide Petroleum NL (1994) 179 CLR 332 Wentworth v Wentworth (1998-1999) 46 NSWLR 300 DECISION : 100% of recovery to funding creditors.