“Compensate the company. Then pay that money to me!”

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P, a former shareholder, sought to bring a claim on behalf of the Co and then have the proceeds paid to themselves: [1] - [3]

s237(2)(a): the Co was not going to bring the claim itself: [8]

s237(2)(d): the Court considered (i) whether the pleaded case could be proved, and (ii) if so whether that would ground the relief sought: [12]

When practising, P was the sole shareholder of the Co and principal benef of the trust the Co operated. That way, P’s work earned income for the Co: [16]

P chose that structure, and form of income distribution, likely due to financial advantages P considered arose - and so was bound to the risks arising from that choice: [17]

P made an agreement with some the Ds that would see advisory work referred to the Co, and would see NewCo established to do additional work: [19]

From 2013 the relationship between P and the Ds deteriorated with the Ds allegedly not referring work to NewCo and otherwise breaching the agreement: [24]

The Ds purported to remove Co from controlling NewCo thereby displacing P NewCo and diverting NewCo’s business to themselves: [31]

In 2017 P was made bankrupt, and later removed as beneficiary of the trust with the Ds buying P’s shares in Co from P’s bankruptcy trustee: [37], [53]

Despite a contract claim being out of time, it appeared there was “apparent unlawfulness” and claims that the Ds breached their duties to NewCo: [32], [35]

Importantly, the relief P sought chiefly was for distribution to be made to them as former benef of the trust, requiring the Co to on-pay its compensation to the P: [36], [40]

P attempted to characterise the Co’s loss as P’s loss due to their benef status at the time: [44]

P was unable to show (i) the Co’s income would inevitably be distributed [45], (ii) that if distributed that it would go to P solely, noting she was not the sole beneficiary [47], or (iii) that all the money paid to the Co would be distributed and not otherwise applied to e.g. costs of administering the trust etc: [48]

The Court found there was no entitlement to the distribution relief sought by P: [49]

An argument that P’s bankruptcy trustee may have entitlement did not require determination: [51]

The Court found there was no serious question to be tried as to P’s final relief, leaving other prayers arguably intact. However the problems with the relief meant the s237(2)(c) best interests test was not met: [56[

s237(2)(c): P’s claim was only for P’s benefit and without regard for the Co’s other obligations or objectives. It was not in the best interests of the Co that it be brought: [58] - [65]

s237(2)(b): In seeking an unlitigated determination that the Co pay all compensation to her the Court found P was not coming in good faith: [82], [83]

Having failed to meet the s237(2) criteria, P’s application was dismissed: [90]

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