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A group of entities controlled by P (“P”) was in business with a group of entities controlled by D (“D”). P and D did property development work together via various operating Cos (“OpCos”): [3]

P commenced oppression proceedings (s232) saying that D breached their duty to OpCos, and the ACL: [4]

P sought the Court’s leave to bring those derivative claims on behalf of OpCos (s236): [5]

P and D conducted their projects in quasi-partnership: [10]

In around 2019 D made loans to OpCos to support a development. P says D promised those loans would not be called in except for in certain circs which had not occurred: [15]

In late 2021 D, without notice, enforced their loans and appointed receivers to OpCos: [17]

P says this was a breach of D’s directors duties, and that all Ds had engaged in misleading or deceptive conduct by: giving assurances the loans would not be enforced, and then enforcing them: [18], [19]

There was a suggestion D did this to bring a specific development to an end: [22]

P sought leave to bring derivative actions on behalf of OpCos in relation to this conduct, having already commenced an oppression claim.

The Court worked through the s237(2) criteria:

(a) OpCos would not bring the claims as D would prevent that: [26]

(b) P came in good faith, pursuing a genuine claim for a missed opportunity for profit: [27]

(d) There was a serious issue to be tried, including because D provided no explanation: [28]

(e) The notice requirement was not met but the Court would waive it: [29]

This left s237(2)(c) for consideration: was in the best interests of OpCos for P to be granted leave?

It was “undoubted” that resolving the P and D conflict would be in OpCos’ best interests: [39]

Further, as OpCos were in receivership, litigation would not upset its day to day business: [40]

D suggested P’s claim was weak. This was rejected: [50]

The Ds suggested their worth was not proven (i.e. if leave was granted, would OpCos be suing parties with any assets?) Ds assets were within D’s knowledge and no evidence was put on it. Noting D’s ability to obtain big finance it was possible to infer D had substance: [51] - [53]

P provided $750K as security if OpCos faced an adverse costs order, which was sufficient: [64]

Extensive consideration was given to the contrast between the oppression remedy and a derivative action: [66] - [88]

Some of the Ds were found not to be proper parties to an oppression claim. This left s236 as the appropriate path to pursue them, not s233: [92] - [96]

Leave was granted to P to pursue the derivative actions against the Ds: [98]