The applicants had brought proceedings against a corporate defendant and its shareholders alleging oppression over the course of many years in relation to the conduct of the company’s affairs. One of the shareholders was a trustee that held shares in the company on trust and the beneficiaries of the trust were the applicants and the natural person defendants. The defendants had contended that the applicants did not have standing to run their claims because the proper plaintiff was the current trustee (or one of its predecessor trustees). The current trustee had declined to file a cross-claim seeking the same relief as the applicants against the other Defendants. The applicants applied for leave to bring claims in right of the present trustee.
The Court considered the present trustee’s absence of action and the difficulty that it faced that to file a cross-claim would be effectively acting in the interests of either the applicants or natural person defendants. The Court recognised that as the present trustee was not going to bring a cross-claim, the applicants would be deprived of the opportunity to vindicate the claims that were available to the present trustee and of which they were beneficiaries. His Honour also determined that the applicants’ proposed claims were meritorious as, while there may have been good defences available to the defendants, the proposed claims were clearly arguable, there was evidence to support to allegations made in the proposed claims and the defences may not succeed on full argument.
On these bases, his Honour ordered that the Applicants be granted leave to file the amended pleadings to make claims in right of the present trustee.
Michael Hodge QC (with B Phillips) appeared for the Plaintiffs, instructed by Results Legal.
The judgment is available here.