Swansson v Pratt [2002] NSWSC 583

Reported Decision : 42 ACSR 313 (2002) 20 ACLC 1594

New South Wales Supreme Court

CITATION : Swansson v Pratt [2002] NSWSC 583 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1150/02 HEARING DATE(S) : 20 June, 2002 JUDGMENT DATE : 3 July 2002

Ruth Swansson - Plaintiff PARTIES : R.A. Pratt Properties Pty Ltd - First Defendant Peter Highland - Second Defendant JUDGMENT OF : Palmer J

COUNSEL : P.P. Strasser - Plaintiff N.J. Kidd - Second Defendant Mark Phillip Symonds - Plaintiff SOLICITORS : No appearance for First Defendant Selby Levitt - Second Defendant CATCHWORDS : CORPORATIONS - DERIVATIVE ACTION - LEAVE TO COMMENCE - GOOD FAITH - BEST INTERESTS OF COMPANY - Shareholder applies for leave to bring derivative action against director of company - breaches of statutory duties under s.180, s.181, s.182 Corporations Act and breach of fiduciary duties under general law alleged - closely held family company - majority of shareholders do not wish action to be taken - real grievance between applicant and director arises out of dissolution of marriage and alleged concealment of property - question whether applicant seeking double recovery of property the subject of divorce settlement - whether applicant acting in good faith as required by s.237(2)(b) - principles discussed - whether proposed derivative action in the best interests of the company as required by s.237(2)(c) - principles discussed. HELD: Applicant had not adduced sufficient evidence to discharge onus of satisfying the Court that she was acting in good faith - applicant had not satisfied the Court that the derivative action was in the best interests of the company. DERIVATIVE ACTION - COSTS ORDER - Applicant seeks order under s.242 that company pay costs of derivative action - discussion of evidence required. HELD: No order justified. - Canada Business Corporations Act, 1985 - Corporate Law Economic Reform Program Act, 1999 (Cth) LEGISLATION CITED : - Corporations Act 2001 (Cth), s.9, s.180, s.181, s.182, s.185(a), s.236(1), s.236(3), s.237(1), s.237(2), s.242, Pt. 2F.1A, s.1317K - Family Law Act, 1975 (Cth) - s.87, s.87(8)(a), s.87(9)(b) - Limitation Act, 1969 (NSW) - s.23, s.55(1)(b) - New Zealand Companies Act, 1993 - s.165 - Advent Investors Pty Ltd v Goldhirsch (2001) 37 ACSR 529 - Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 - Bellman and Western Approaches Ltd, Re (1981) 130 DLR (3d) 193 - Chapman v E-Sports Club Worldwide Ltd (2000) 35 ACSR 462 - Chemaisse and Federal Commissioner of Taxation, In the Marriage of (1988) FLC 91-915 - Dowling v Colonial Mutual Life Assurance Society (1915) 20 CLR 509 - Edwards v Halliwell [1950] 2 All ER 1064 - Foss v Harbottle (1843) 2 Hare 461 CASES CITED : - IOC Australia Pty Ltd v Mobil Oil Australia Ltd (1975) 11 ALR 417 - Karam v ANZ Banking Group Ltd (2000) 34 ACSR 545 - Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 - Radwan and Radwan (1986) FLC 91-755 - Ruralcorp Consulting Pty Ltd v Pynery Pty Ltd (1996) 21 ACSR 161 - Suters, In Marriage of (1983) FLC 91-365; 9 Fam LR 340 - Talisman Technologies Inc v Queensland Electronic Switching Pty Ltd [2001] QSC 324 - Techflow (NZ) Ltd v Techflow Pty Ltd (1996) 7 NZCLC 261,138 - Vrij v Boyle (1995) 3 NZLR 763 - Williams v Spautz (1992) 174 CLR 509 DECISION : Originating Process dismissed with costs.