Mudgee Dolomite & Lime Pty Ltd (No. 4) [2021] NSWSC 393

“Can we liquidators defend this appeal, and use someone else’s lawyers?”

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A dispute between two Dirs and equal shareholders of a mining Co led to it being wound up.

Before the windup SH1 brought a derivative action on behalf of the Co against SH2 and related entities.

The claim succeeded re revenue from one mine which SH2 diverted away from the Co to their own interests, and failed in relation to redirected revenue from another mine.

SH2 appealed.

SH1 applied to lodge a cross-appeal on behalf of the Co.

The liquidators came before the Court to seek s 90-15 advice including that they would be justified in:
(i) causing the Co to defend SH2’s appeal
(ii) not opposing SH1’s cross-appeal
(iii) instructing the same lawyers SH1 used for the derivative action

Advice was given.

Re (i) the liqs were justified in defending the appeal: [40]

Re (iii) the liqs were justified as it would be in the best interests of the Co to making use of the earlier lawyers’ case specific knowledge: [46], [47], [56]

Re (ii) the liqs were justified in not opposing as SH1 bore many of the risks (including of an adverse costs order) and there was potential significant upside for the Co: [65]

The liqs’ costs of the proceedings were to be costs of the winding up: [68]