PARK & ANOR V. LANRAY INDUSTRIES PTY LTD & ORS [2010] QSC 82
QUICK FACTS
- The plaintiffs who were the liquidators of the company in liquidation brought an action in their own name rather than as “the liquidators for the company” against the defendants.
- Their claims were based on unjust enrichment, uncommercial and voidable transactions.
- The defendants challenged the capacity in which the plaintiffs brought the proceedings in their own name and also contended that the amended statement of claim filed by the plaintiffs should be struck out.
KEY ISSUE
The key issue in this case was the capacity under which liquidators can bring an action against the defendants – either in their own name or in the name of the company?
SUBMISSIONS AND FINDINGS
- Section 477(2) of the Corporations Act (the Act) entitles the liquidator of a company to bring legal proceedings in the name of and on behalf of a company. The liquidators as individuals were incompetent to sue to recover this alleged loss.
- Section 588FF of the Act empowers only a company’s liquidator to apply for an order where a company has engaged in a voidable transaction. In the present claim, the named individuals were not identified as the liquidators.
CONCLUSION
The Court gave leave to the plaintiffs to make necessary amendments to the claim to reflect the several capacities in which they could sue the defendants.
LESSON
The Act entitles the liquidator of a company to bring legal actions in the name of and on behalf of a company. Therefore if the liquidators wish to sue on behalf of the company then they have to bring an action in the name of the company, the liquidators as individuals are incompetent to sue on behalf of the company.
In this case, the court offered the plaintiffs an opportunity to rectify the defect. However, it is not clear whether this opportunity will be afforded on all such occasions. Plaintiffs therefore should be careful about bringing claims in the right legal capacity as recognized by the law.