Maher v Honeysett and Maher Electrical Contractors Pty Ltd [2009] NSWSC 445

New South Wales Supreme Court

CITATION : Maher v Honeysett and Maher Electrical Contractors Pty Ltd [2009] NSWSC 445 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 09/04/09

JUDGMENT DATE : 26 May 2009

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Order releasing undertaking to a limited extent

CATCHWORDS : CORPORATIONS - statutory derivative action - leave granted for member to bring proceedings on behalf of company - member undertakes to protect company from costs and expenses of the proceedings - proceedings now concluded - company awarded equitable compensation - equitable compensation less than amount by which actual expenses of litigation exceed assessed costs awarded to the company - whether member should be released from undertaking

LEGISLATION CITED : Corporations Act 2001 (Cth), Part 2F.1, s 237

CATEGORY : Consequential orders

CASES CITED : FWV Stanke Holdings Pty Ltd v O'Meara [2007] SASC 413 Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2005] NSWSC 859

David Maher - Plaintiff PARTIES : Honeysett and Maher Electrical Contractors Pty Ltd - First Defendant Mark William Honeysett - Second Defendant

FILE NUMBER(S) : SC 6055/04

COUNSEL : Mr A J Fernon - Plaintiff Ms S A Sirtes - Defendants

SOLICITORS : Low Doherty & Stratford - Plaintiff Morton & Harris RMB Lawyers - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

TUESDAY, 26 MAY 2009

6055/04 DAVID MAHER v HONEYSETT AND MAHER ELECTRICAL CONTRACTORS PTY LTD & ANOR JUDGMENT 1 By cross-claim in these proceedings, Honeysett & Maher Electrical Contractors Pty Ltd ("HME") sued the plaintiff, Mr Maher, for breach of the duties owed by him to it as a director of the company. The cross-claim was successful and it was ordered that Mr Maher render equitable compensation to HME. It was also ordered that Mr Maher pay the costs of both Mr Honeysett and HME. 2 The cross-claim brought by HME against Mr Maher was by way of derivative proceeding under Part 2F.1 of the Corporations Act 2001 (Cth). HME was actuated, in that respect, by Mr Honeysett. He and Mr Maher are equal shareholders in, and the only directors of, HME. Mr Honeysett sued on behalf of HME pursuant to leave granted under s 237 of the Corporations Act. 3 In the light of the outcome of the cross-claim, a question has arisen in relation to the following order made on 25 August 2005 in conjunction with the order granting Mr Honeysett leave under s 237 (see Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2005] NSWSC 859): "Upon the second defendant Mark William Honeysett undertaking to the Court that he will pay and bear and indemnify Honeysett & Maher Electrical Contractors Pty Ltd ACN 064143684 against all costs, charges and expenses of and incidental to the bringing and continuation of the proceedings brought by him pursuant to Order 1 below, except insofar as the Court may in future otherwise direct or allow, I make the following orders —