The recent South Australian Supreme Court decision in Viscariello v Macks provides a reminder to practitioners and their professional advisors when commencing (and continuing) litigation. Whilst not taking issue with the initial decision by the liquidator to commence proceedings to recover a debt of $28,000, Chief Justice Kourakis was less than impressed with the liquidator’s decision to continue with the litigation costing in excess of $220,000.

Whilst the 240 page judgment touches on a number of issues including independence, impartiality, pre-appointment representations and whether administrators engage in trade or commerce in performing their duties under the Corporations Act 2001 (Cth), practitioners need to carefully consider the following when conducting litigation:

1. is there any public benefit in commencing (or continuing) the litigation;
2. was the litigation commenced (or continued) for a collateral purpose (i.e. to benefit the practitioner personally);
3. is an unsatisfactory outcome likely and importantly, foreseeable;
4. ensuring cost agreements with lawyers (and other professional advisors) are documented and carefully scrutinised; and
5. ensuring transparency of the litigation with creditors.

For more information please contact Blake O’Neill.