Plaintiff v First Defendant

1 By a summons filed 5 May 2021 the plaintiff, Maria Lantouris (Ms Lantouris), seeks leave pursuant to s 240 of the Corporations Act 2001 (Cth) (Act) to compromise and settle a claim brought on behalf of 22 Park Street Pty Ltd (the Company) against the eighth defendant (Mr Blumenthal) in County Court proceeding CI-20-01142 (County Court Proceeding). Mr Blumenthal is alleged to have been the former solicitor for the Company and Ms Lantouris in connection with the purchase by the Company of a property in Abbotsford some time ago. Among other things, it is alleged that Mr Blumenthal breached his duty of care when acting and advising the Company and Ms Lantouris in relation to that transaction.

2 The summons also sought an order that the costs of this application be deemed to be costs of and incidental to the pursuit of the County Court Proceeding within the meaning of the undertakings given in support of the orders made by this Court on 27 November 2020. Ultimately this part of the application was not pursued.

3 The application came before the court urgently and ex parte on Wednesday 5 May 2021. At that hearing directions were made requiring notice to be given to the second defendant (Receiver), and fixing the matter for urgent hearing on Monday 10 May 2021. The urgency arose because a settlement deed had been entered into between Ms Lantouris, the Company and Mr Blumenthal (Settlement Deed) which is subject to a condition precedent requiring leave pursuant to s 240 of the Act to be granted to Ms Lantouris to compromise and settle the claim against Mr Blumenthal. The trial of the County Court Proceeding is fixed to commence in seven days, on 17 May 2021, and is expected to occupy at least 10 hearing days.

4 Ms Lantouris relied upon two affidavits of Mr Mario Merlo, her solicitor and the solicitor for the plaintiffs in the County Court Proceeding (including the Company), sworn 4 and 6 May 2021. She also relied upon an outline of submissions filed on 6 May 2021, which was supplemented orally. During the hearing Ms Lantouris undertook, through her counsel, to spend the $90,000 settlement sum (Settlement Sum) only on costs, disbursements and expenses associated with the pursuit of the County Court Proceeding.

5 Pursuant to the orders made on 5 May 2021, notice of the application was given to the Receiver that day. The Receiver was represented by solicitors and counsel at the hearing and relied upon his solicitor Mr Begg's affidavit sworn 9 May 2021 and an outline of submissions of the same date, which was supplemented orally.

(a) Leave pursuant to s 240 of the Act should be granted to Ms Lantouris, and to the extent necessary, the Company, to compromise and settle the claim against Mr Blumenthal in the County Court Proceeding on the terms set out in the Settlement Deed.

(b) Paragraph 2 of the summons dated 5 May 2021 should be struck out.

7 The background to the grant of leave to Ms Lantouris to bring the County Court Proceeding on behalf of the Company was addressed in the reasons of Almond J dated 27 November 2020 (November 2020 Reasons), to which I refer and have had regard, but which are not necessary to set out.

8 By orders made on 27 November 2020 Almond J ordered that:[1]

(a) The plaintiff has leave nunc pro tunc pursuant to s 237 of the Corporations Act 2001 (Cth) to bring the County Court Proceeding on behalf of the Company.

(b) The plaintiff pay 50% of the second defendant's costs of and incidental to the proceeding, to be assessed by the Costs Court on the standard basis in default of agreement.

9 The orders also recorded the undertakings given by the plaintiff and the plaintiff's solicitor as follows:

(a) Upon the plaintiff's solicitor undertaking by counsel that he will not seek to recover from the Company any costs, charges or expenses of and incidental to the pursuit of the [County Court Proceeding] other than where and to the extent that an amount has been recovered by the Company from any of the defendants to the County Court proceeding.

(b) Upon the plaintiff by her counsel undertaking that she will bear liability for payment of the costs, charges and expenses of and incidental to the Company's pursuit of the [County Court Proceeding] to the extent that any such amount remains due from the Company to its solicitor.

(c) Upon the plaintiff by her counsel undertaking that she will indemnify the Company in relation to any adverse order for costs that might be made against the Company by any of the defendants to the [County Court Proceeding].

(d) Upon the plaintiff by her counsel undertaking to keep the receiver of the Company informed of the progress of the [County Court Proceeding].

10 As was the case when Ms Lantouris sought leave to proceed with the County Court Proceeding in November 2020, she remains the sole director and shareholder of the Company.

11 In the County Court Proceeding the plaintiffs seek damages and other relief against eight defendants in connection with various property transactions and related matters involving Ms Lantouris, her mother and the Company, who are the three plaintiffs in that proceeding. The application now before the court relates only to a proposed compromise and settlement with one of the defendants, Mr Blumenthal.

12 The County Court Proceeding is to continue against the remaining defendants, with the trial commencing very shortly. Counsel for Ms Lantouris confirmed that the remaining claims being pursued include substantive damages claims by the Company against the other defendants. Subject to that which is addressed below regarding the claim against Mr Blumenthal in the County Court Proceeding, it is not necessary for present purposes to address the detail of the other claims being pursued in the County Court Proceeding, or the defences of the first to seventh defendants.

13 The position of the Receiver may not be straightforward. As is apparent from the November 2020 Reasons, the Receiver was appointed on 9 November 2017 by Argyle Lending Pty Ltd (Argyle) in connection with a loan or other amount said to be owing by Ms Lantouris to Argyle and which was said to be secured by a general security agreement signed on 25 July 2017, which included security over the Company. As observed by Almond J when the application for leave under s 237 of the Act was made before him, the court was informed that Argyle had sued Ms Lantouris in a (different) County Court proceeding (Argyle Proceeding) seeking recovery of the claimed amount. The Court was also informed at that time that one possible outcome of the Argyle Proceeding was that the County Court could find that no money was payable by Ms Lantouris to Argyle and that there was, therefore, no basis for the appointment by Argyle of the Receiver to the Company in the first place. At the time of the application before Almond J, judgment in the Argyle Proceeding was reserved.

14 On 25 March 2021 Judge Ryan handed down reasons in the Argyle Proceeding dismissing Argyle's claim against Ms Lantouris, and it seems, determining that there never was any money owed by Ms Lantouris to Argyle. The court was informed that final orders were made dismissing Argyle's claim on 30 April 2021.

15 At the hearing of the application before me the court was informed that Ms Lantouris and the Company contend that, in light of the judgment in the Argyle Proceeding, there was never any basis for the appointment of the Receiver to the Company, and that the appointment is and was invalid.[2] Counsel for the Receiver confirmed that no application had yet been made to set aside the appointment. In an exchange with the Bench, counsel for the Receiver also properly acknowledged that if Judge Ryan's decision is not overturned the Receiver will have been appointed where there may be no debt, but also said that it may be a separate question as to whether the appointment is invalid. In part this was said to be based on the fact that the appointment was made under a general security agreement that was not the subject of the proceeding before Judge Ryan in the Argyle Proceeding. Counsel for the Receiver also informed the court that he holds instructions to appeal the decision of Judge Ryan, although as yet the required steps have not been taken.

16 The invalidity or otherwise of the appointment of the Receiver in the first place is not an issue that is before the court on the current application, or, it was submitted, an issue that was determined by Judge Ryan in the Argyle Proceeding. Whilst it is something that the Receiver and his counsel and solicitors will need to reflect upon and consider carefully, this is not a controversy that can or should be determined by the court on the current application. As things stand the Receiver remains the receiver and manager of the Company.

17 Mr Merlo's affidavits succinctly addressed the background, the terms of the Settlement Deed, counsel's opinion regarding the merits of the claims against Mr Blumenthal,[3] and his own view of the position, which was consistent with the views expressed by counsel. Mr Merlo also drew attention to the limited amounts involved in the claim against Mr Blumenthal and the proposed settlement, and his desire to seek to deal with this application in a cost-effective and efficient way. He also addressed the timelines of negotiations, which demonstrated that there had not been any material delay between the proposed settlement, execution of the Settlement Deed on 30 April 2021, and the making of the application now before the court.

18 The exhibits to Mr Merlo's affidavits included the Settlement Deed and a memorandum of advice from counsel for the plaintiffs in the County Court Proceeding, including the Company.[4] The Settlement Deed reveals that it is a straightforward settlement involving only the plaintiffs and Mr Blumenthal, and pursuant to which the Settlement Sum is to be paid by Mr Blumenthal to the plaintiffs jointly. Payment is to be made within 28 days from the date on which Mr Blumenthal's solicitors are in receipt of the Settlement Deed (which I infer has occurred) and the making of an order granting leave pursuant to s 240 of the Act to allow the claim against Mr Blumenthal to be compromised and settled in the manner recorded in the Settlement Deed.

19 The evidence of Mr Begg and the correspondence between solicitors exhibited to his affidavit revealed a level of tension between the parties and the practitioners that appears to be ongoing. Although I observe in passing that there would appear to be some room for improvement in the tone of some of the communications, I am not in a position to and do not make any particular criticism of anyone in the current context. The detail of the exchanges is not significant for present purposes given the parties are before the court and the issue for determination is a narrow one. Most relevantly, on what was said to be the limited information available to the Receiver, the compromise and settlement was considered to appear to be reasonable, with the Receiver supporting rather than opposing the granting of leave. However, the Receiver's position was that the Settlement Sum should be held in trust for the time being, which is addressed later in these reasons.

20 The Receiver also expressed concerns in correspondence between the parties and in submissions regarding the level of information provided to him about the proceeding in the past, which was said to be inadequate given the undertaking given by Ms Lantouris to the court in November 2020 (referred to above). As was apparent from the correspondence and the submissions, this was disputed - although it was at least implicitly and correctly accepted by both parties that this was another matter that was not appropriate for detailed consideration or determination on the current application.

Section 240 of the Act

21 Section 240 is part of Part 2F.1A of the Act and provides as follows:

Proceedings brought or intervened in with leave must not be discontinued, compromised or settled without the leave of the Court.

22 The learned authors of Ford, Austin and Ramsay's Principles of Corporations Law,[5] observe that the section '... is meant to prevent any collusion between the applicant and the defendant which might benefit the applicant but not be in the best interests of the company. For example, it is meant to prevent directors who might be defendants making a payment to the applicant with the intention of persuading the applicant to discontinue the legal proceedings on behalf of the company.'

23 This provision was subject to consideration by Barrett J in Carpenter v Pioneer Park (in Liquidation) [2004] NSWSC 1007, where his Honour observed as follows when dealing with proposed orders on an application by the plaintiff for derivative leave to bring a claim on behalf of a company:

[41] The liquidator's para (c) envisages a role for the liquidator in any decision to compromise or settle the proceedings brought by Mr Carpenter on the company's behalf. This, to my mind, would be contrary to the legislative scheme. That scheme envisages that the person granted leave will have responsibility for the proceedings to the exclusion of the normal decision makers whose unwillingness or inability to set the company in motion in the ordinary way forms part of the statutory basis for allowing the applicant to become the decision maker in their place. The particular matter of compromise or settlement (as well as discontinuance) is, in any event, dealt with in s 240:

Leave to discontinue, compromise or settle proceedings brought, or intervened in, with leave

Proceedings brought or intervened in with leave must not be discontinued, compromised or settled without the leave of the Court.

[42] This provision provides a sufficient safeguard. If Mr Carpenter sought leave to enter into a compromise or settlement on behalf of the company, the court might well consider it appropriate that the liquidator have an opportunity to make submissions on the question whether leave should be granted. Section 240 does not apply, of course, where a creditor or contributory sues in the name of a company in liquidation, exercising leave granted by the court pursuant to its inherent power. But the court, in granting leave, can impose a term to the same effect.

24 These matters were later referred to by Mansfield J in Rafferty v National Australia Bank Ltd [2011] FCA 169, where he said in respect of s 240 of the Act:

[10] Clearly such a provision is intended to ensure that the court have the opportunity to prevent any collusion between the plaintiff and the defendant in the particular circumstances, and perhaps more widely to oversee the question whether the proposed resolution is in the best interests of the company. The court may permit others whose interests may be affected to be heard before deciding whether to grant leave to compromise a proceeding brought with leave under s 237(2): Carpenter v Pioneer Park Pty Ltd (in liq) [2004] NSWSC 1007; (2004) 211 ALR 457 per Barrett J at [41].

25 Section 240 was also addressed in a different context by Stewart J in Nation Energy (Australia) Pty Ltd v Paltar Petroleum Ltd (Administrators Appointed).[6] One of the issues that arose in that case related to the question of dismissal versus discontinuance, where Stewart J observed as follows:

12. As indicated, the proceeding against Paltar was brought with leave under s 237 of the Act. Section 240 provides that proceedings brought with leave "must not be discontinued, compromised or settled without the leave of the court". Section 240 does not mention dismissal of the proceeding.

13. Nation Energy seeks the dismissal on the basis that it is by agreement of the parties, with the result that the proceeding against Paltar is to be treated as having been "settled", and that that settlement provides for, or justifies, the dismissal. On that basis, Nation Energy seeks leave under s 240 for the proceeding against Paltar to be dismissed.

14. With respect to the order that it seeks actually dismissing the proceeding against Paltar, Nation Energy relies on s 241 of the Act which gives to the court a broad supervisory power to make any orders, and give any directions, that it considers appropriate in relation to proceedings brought or intervened in with leave: Fiduciary Ltd v Morningstar Research Pty Ltd [2005] NSWSC 442; 53 ACSR 732 at [15] per Austin J. None of the particular types of orders listed in paragraphs (a) to (d) of s 241 specifically covers the dismissal order that is presently sought, but that list - which is prefaced by the word "including" - is clearly not exhaustive and the wording of the section is wide enough to enable the court to make such a dismissal order: Isak Constructions v Faress [2005] NSWSC 679 at [11] per Campbell J; Magafas v Carantinos [2008] NSWSC 691 at [15]- [23] per Einstein J.

15. Given that the power under s 241 is supervisory of proceedings commenced with leave under s 237, and the interests of the company are central to the granting of such leave, the interests of the company must be central to the exercise of the power under s 241. In considering what is in the best interests of the company, it is necessary to consider the prospects of success of the action, the likely costs and likely recovery if the action is successful and likely consequences if it is not: Robash Pty Ltd v Gladstone Pacific Nickel Pty Ltd [2011] NSWSC 1235; 86 ACSR 432 at [57] per Ball J.

26 Stewart J was '... satisfied that the parties have "settled" the case as between Nation Energy and Paltar on the basis that it should be dismissed, [and] that there [was] appreciably good reason why the proceeding should be dismissed...'.[7]

27 As is apparent, the circumstances involved in Nation Energy were different to those here under consideration because, among other things, the application was not only for leave to compromise the proceeding but for orders actually dismissing the proceeding as well as granting leave.

28 It is in my view unsurprising that s 240 of the Act addresses discontinuance expressly, and separately, to compromise and settlement. The step of discontinuance can be taken by a party[8] without there being any compromise or settlement. There is no statutory impediment under s 240 of the Act to the court granting leave in respect of a settlement or compromise that involves dismissal (or other types of orders), subject of course to the court's discretion otherwise being exercised judicially and in accordance with principle. The decision in Nation Energy did not suggest otherwise, and this also sits comfortably with the observations of Stewart J in that case that he was '... satisfied that the parties have "settled" the case as between Nation Energy and Paltar on the basis that it should be dismissed...'.[9]

29 Ms Lantouris relied upon the affidavits of Mr Merlo and her written outline of argument, which was supplemented orally. There was no controversy regarding the terms and operation of s 240 of the Act or the matters to be considered by the court. Unsurprisingly, no evidence objections were raised.

30 Attention was drawn to the evidence of Mr Merlo, the terms of the Settlement Deed, and the terms of counsel's written opinion which, I observe, firmly and logically supported the County Court Proceeding being settled and compromised upon the terms of the Settlement Deed.

31 It was submitted that it was plain that the compromise and settlement was in the best interests of the Company, with matters relied upon said to include the following:

(a) The claim against Mr Blumenthal being of relatively low monetary value in the context of the County Court Proceeding, and otherwise.

(b) In the context of a likely complex trial, the removal of a 'small scale' participant maximising the plaintiffs' chance of success in what were said to be the more valuable claims against the remaining defendants.

(c) The existence of a Calderbank offer from Mr Blumenthal which, among other things, meant there is uncertainty as to the costs consequences of pursuing a case against him even if it is successful or partly so.

(d) Ms Lantouris being given control of the County Court Proceeding on behalf of the Company and Almond J refusing to allow the Receiver to have control of the settlement process.

(e) Ms Lantouris being the sole shareholder and director of the Company, having control of the County Court Proceeding for the Company, and having been advised to accept the settlement on behalf of the Company.

(f) Some limited uncertainties regarding recovery.

(g) The costs risks if the claim does not succeed.

32 Ms Lantouris also submitted that payment of the Settlement Sum would further assist in facilitating the funding of the balance of the trial in the County Court Proceeding, which given counsel's advice on prospects, was said to be in the interests of the Company. It was also noted that due to the complex nature of the trial there was a 'real risk that it will exceed 10 days' and there was some prospect that if leave was not granted the Company may not be able to fund a trial lengthier than the anticipated 10 days, which was contrary to the Company's interest.

33 It was submitted that it is plain that the Settlement Sum comprises 'fruits' of the claim brought on behalf of the Company and that such fruits can be used to fund the litigation, which is what is going to occur. Reference was also made to the modest amount of the Settlement Sum in this context and Ms Lantouris' undertaking that it will only be spent on costs, expenses and disbursements associated with the pursuit of the County Court Proceeding.

34 Having regard to the content of counsel's and Mr Merlo's advice, what were regarded as (variously) positive and reasonable prospects of success of the remaining claims, and the terms of the Settlement Deed, overall it was submitted by counsel for the plaintiff that the 'compromise represents a good outcome and is in the best interests of the Company'.

35 As earlier indicated, the Receiver did not oppose the granting of leave and, based on that which it knew, considered the settlement to appear reasonable. The Receiver also observed that it was in the Company's interests that the Company's claims in the County Court Proceeding continue to be funded. However, the Receiver's primary submission was that if leave is to be granted then there is no longer any urgency and the court should require the Settlement Sum to be held in trust so that various matters can be addressed in relation to it some time in the future. These were said to include matters regarding apportionment, the extent to which funds should be able to be spent on the litigation, and which amounts related to the pursuit of claims for the Company given that other claims were also pursued in the County Court Proceeding and otherwise by, at least, Ms Lantouris in her own right.

36 In this context attention was drawn to the evidence before Almond J regarding Ms Lantouris having material resources, including a sum of approximately $200,000 being held in trust, and the undertakings given by Ms Lantouris that I have earlier referred to. The Receiver's position was that the County Court Proceeding should be funded from these resources first and not the Settlement Sum.

37 That said, counsel for the Receiver (understandably) acknowledged that, broadly speaking, fruits of litigation pursued on behalf of a Company pursuant to leave granted under s 237 of the Act can generally be used to pay or reimburse legitimate and reasonable costs, disbursements and expenses associated with such litigation. Counsel also recognised that the Settlement Sum was modest in the context of the impending trial and did not contend that the costs incurred or to be incurred would not exceed the amount in question, but noted also the asymmetry of the information that the Receiver has regarding costs and expenses incurred and to be incurred. The Receiver's position remained that the Settlement Sum should be set aside in trust.

38 As to the position regarding the dismissal of Argyle's claim in the Argyle Proceeding, the Receiver's position was as earlier indicated in paragraph 15 above, it also being apparent from observations made on behalf of the Receiver that those advising him are conscious that there are substantive matters to be considered and addressed from the Receiver's perspective. It was accepted that these are not matters for determination now.

39 The Receiver also expressed concern regarding the application having been initially pursued on an ex parte basis, with notice only being given after a direction was given by the court requiring that step to be taken. Further concern was expressed regarding what was described as an 'in terrorem' approach to the application in connection with costs and related matters, the detail of which need not be set out. The Receiver further submitted that there was no risk of Mr Blumenthal's insurer not paying the Settlement Sum as a result of any non-payment of a deductible.

40 It is in my view clear that it is appropriate to grant leave to Ms Lantouris - and to the extent it is required, the Company - to compromise and settle the County Court Proceeding against Mr Blumenthal on the terms of the Settlement Deed. I propose to grant that leave.

41 At all relevant times the plaintiff was and remains the sole shareholder and director of the Company and there is no evidentiary or other basis for suggesting the existence of collusion or other relevantly questionable conduct between Ms Lantouris and Mr Blumenthal in connection with the Settlement Deed. On the evidence before me the interests of the Company and Ms Lantouris are strongly aligned.

42 It is clear from Mr Merlo's evidence, the terms of the Settlement Deed, and counsel's advice, that the Settlement Deed records an arms-length settlement agreement which involved insurers and which was reached after extended negotiations, including a mediation.

43 It is also apparent that the compromise and settlement is in the best interests of the Company and not adverse to them, accepting of course that questions of genuine commercial judgment and assessment are necessarily involved. That the settlement is in the best interests of the Company is supported by the views of both counsel and solicitors, as recorded in Mr Merlo's affidavit and counsel's written advice. Although disclosed on a non-confidential basis, the detail of that advice need not be set out.

44 It is plain that experienced counsel and solicitors each consider that there are factual and other disputes between the parties to the Settlement Deed, and that there are 'weaknesses' in aspects of the claims against Mr Blumenthal, as well as costs risks generally and those associated with the terms of a Calderbank offer. Counsel considers the claim in respect of the allegedly unauthorised distribution of $80,000 by Mr Blumenthal as appearing not to have a satisfactory answer, but the sum to be paid exceeds that amount, and that claim is not considered to be without risk - with further costs and time to be incurred if it is pursued, and attendant costs risks associated with any trial.

45 The interests of the Company are also well illustrated when one considers the risks and costs faced by the Company if leave to proceed with the settlement and compromise is not granted.

46 Although the information in the hands of the Receiver was said to be limited, on the information available to him, which included the material before the Court, the settlement was considered to be reasonable, and the ongoing funding of the claims was considered also to be in the interests of the Company.[10] In my view, acknowledging the apparent reasonableness of the settlement and that ongoing funding was in the Company's interest was a proper position for the Receiver to take.

47 The claims in the County Court Proceeding are proceeding against the other defendants. The claims based on alleged unconscionable conduct involve seeking substantive relief, including the setting aside of loan and security documents to which the Company is said to be a party. If successful, those claims will self-evidently be in the best interests of the Company. The evidence reveals that the pursuit of the remaining claims will be aided by funding from the Settlement Sum, which not only appears to be in the interests of the Company, but is considered to be so by counsel and solicitors acting for it.

48 Given the complex and intertwined nature of the transactions the subject of the County Court Proceeding, I do not consider the fact that the other plaintiffs will or may receive a benefit of the litigation funding militates materially against the interests of the Company when viewed in the context of all the circumstances, including the nature and history of the County Court Proceeding, the application heard by Almond J, and that which is to follow in the County Court Proceeding.

49 The Settlement Sum comprises part of the fruits of the litigation brought on behalf of the Company by Ms Lantouris. It is a modest sum in the context of the size, complexity, and likely costs and expenses associated with the pursuit of the claims in the County Court Proceeding, including the substantive claims brought on behalf of the Company. Further, the Settlement Sum is to be spent only on such costs and expenses, which is supported by an undertaking given by counsel for Ms Lantouris on her behalf. In the circumstances, including the sum involved, I do not consider that the Receiver's submission regarding keeping the Settlement Sum in trust has persuasive force or that such a condition should be imposed. It would also not be in the Company's interests to seek to expend further sums, which could be material, seeking to address apportionment or other related issues in respect of this modest amount given the use to which it is to be put, which is aimed at the Company's advantage.

50 It follows that I do not accept the submission that Ms Lantouris should be required to use her own resources for funding the litigation prior to the Settlement Sum being accessed for this purpose. That is to say nothing regarding other circumstances or amounts that might fall later to be considered.

51 I do not accept that the term requiring payment of the Settlement Sum within the 28‑day period earlier referred to assists the Receiver. Given the terms of the Settlement Deed, it appears at least possible that such a mechanism was adopted to cater for the making of this application, noting also that payment is to be made 'within' the relevant period and that it is reasonable to infer that Mr Blumenthal's advisers will likely want to seek the dismissal and other orders in the County Court Proceeding without delay.

52 Although taking into account Mr Merlo's evidence about the risk to insurance cover by reason of what is said to be non-payment of a deductible to date, in the circumstances this is a matter of little, if any, weight. It is also disputed by the Receiver. Were it to be given greater weight, it favours the grant of leave in any event. Similarly, although I accept that removal of what is described as a 'small scale' defendant in the County Court Proceeding may make the conduct of the proceeding easier against the other parties, this too, is of limited weight in the overall circumstances - but again favours the grant of leave if more weight were to be accorded to it.

53 I do not accept the force of the criticism levelled at Ms Lantouris' advisers for initially bringing this matter on ex parte. A judgment call had to be made, the sum involved was modest, and there were urgency and cost considerations. Although hindsight would suggest that the alternative course would have been preferable, the position of giving notice to the Receiver was appropriately drawn to the attention of the court so that it could be considered, as it was. If a further settlement is achieved (and the Receiver remains appointed) the current circumstances suggest that notice of any further application should be provided to him.

54 It will be apparent from the urgency with which this application has been dealt with that I accept it has been necessary and desirable to address the matter swiftly given the impending trial, the terms of the Settlement Deed and the funding position - although this would not follow inexorably in other cases. Each is dependent on its own facts. It is also the position in this case that the evidence revealed that the settlement discussions were pursued after mediation and with sufficient expedition.

55 I should mention an irregular procedural matter. This application was commenced by summons filed in this proceeding, which was the proceeding seeking leave to bring the County Court Proceeding on behalf of the Company that was heard and determined by Almond J in November 2020. It appears that, strictly speaking, the application should have been brought in a fresh proceeding and originated by the filing of an Originating Process. It seems that the course that was adopted was chosen given the urgency, the related nature of the application to that brought before Almond J, and the additional costs involved with commencing a fresh proceeding. I infer that the practitioners involved were also conscious of their obligations under the Civil Procedure Act 2010 (Vic) regarding cost, efficiency and proportionality.

56 Although this would not necessarily be the position in other cases, having regard to the urgency and the amounts involved, in the circumstances I considered it appropriate to allow the application to be made and proceed in the way that it has. In case it is necessary, I propose to order that this proceeding be reinstated nunc pro tunc with effect from 5 May 2021.

57 Given that the County Court Proceeding is shortly to go to trial I will also reserve liberty to apply in case there is a need to seek any further leave in respect of any other proposed settlements or compromises. As counsel for Ms Lantouris acknowledged, one matter that seems likely to fall for consideration when deciding whether or not to enter into any substantive settlement on behalf of the Company, should such an opportunity emerge, will be what amounts are to be paid to which plaintiffs under the terms of any settlement. As was noted at the hearing, this will also likely be a matter for consideration in connection with any further application to this court for leave pursuant to s 240 of the Act.

58 As mentioned, by paragraph 2 of the summons Ms Lantouris sought an order that 'the plaintiff's costs of this application be deemed to be the costs of and incidental to the pursuit of the County Court proceedings within the meaning of the undertakings given in support of the orders made by this honourable court on 27 November 2020'. It was neither necessary nor appropriate to proceed to address this issue on the application before me, whether with urgency or otherwise, which counsel for Ms Lantouris properly recognised.[11]

59 Paragraph 2 of the summons was not ultimately pursued at the hearing and it is appropriate to make a formal order striking it out, which I will do on the basis that it is without prejudice to Ms Lantouris' and the Company's rights to make such appropriate applications in the future as they may be advised or consider necessary.

60 Leave should be granted to Ms Lantouris pursuant to s 240 of the Act to compromise and settle the County Court Proceeding as against Mr Blumenthal on the terms of the Settlement Deed.

61 I propose to make orders to the following effect:

(a) To the extent necessary, this proceeding be reinstated nunc pro tunc with effect from 5 May 2021.

(b) Leave pursuant to s 240 of the Corporations Act 2001 (Cth) is granted to Ms Lantouris, and to the extent necessary, 22 Park Street Pty Ltd, to compromise and settle County Court Proceeding CI-20-01142 against the eighth defendant to that proceeding, Morry Blumenthal, on the terms set out in the deed of settlement dated 30 April 2021 and comprising Exhibit MM1 to the affidavit of Mario Merlo sworn 4 May 2021.

(c) Paragraph 2 of Ms Lantouris' summons filed 5 May 2021 is struck out.

(d) Liberty to apply is reserved.

62 I will hear from the parties on the question of costs and the precise terms of the proposed orders.

[1] Adopting definitions used in these reasons but not in the orders.

[2] Which was also deposed to by Mr Merlo in his second affidavit.

[3] Which was exhibited and addressed on a non-confidential basis.

[4] Although the memorandum of advice referred to counsel advising Ms Lantouris in the County Court Proceeding, Mr Ribbands confirmed to the court on 5 May 2021 that in fact it was advice provided to all the plaintiffs, including the Company, and that he acts for all of them in that proceeding.

[5] RP Austin and IM Ramsay, LexisNexis Butterworths, Ford, Austin and Ramsay's Principles of Corporations Law, (online at 6 May 2021) [10.240.21].

[6] [2019] FCA 1473 (Nation Energy).

[8] Subject to compliance with relevant rules of court.

[10] Noting that the Receiver submitted that funding should come from the plaintiff not the Settlement Sum.

[11] The Receiver made no submissions on the point other than noting in written submissions that it was doubted that the court had the power to make the order sought.