Townshend as Legal Representative for the Estate of Mervyn Townshend v Fendall Farms Pty Ltd [2022] FCA 848

Townshend as Legal Representative for the Estate of Mervyn Townshend v Fendall Farms Pty Ltd [2022] FCA 848

The criteria for leave to bring derivative proceedings under s 237(2) of the Corporations Act 2001 (Cth) are satisfied, as the applicants acted in good faith, leave is in the best interests of the company, there is a serious question to be tried, Fendall Farms will not bring the proceedings itself, and notice requirements are met; derivative leave is accordingly granted for claims as pleaded, and leave is also granted to file cross-claims.

Parties
First Plaintiff: Patricia Joan Townshend as Legal Representative for the Estate of Mervyn Arthur Townshend; Second Plaintiff: Mervyn T Nominees Pty Ltd as Trustee for the Mervyn Townshend Family Trust No 2; First Defendant: Fendall Farms Pty Ltd; Second Defendant: Sunnyacres Pty Ltd; Third Defendant: Kooringa Close (Management) Pty Ltd; Fourth Defendant: Fifty-One Glebe (Management) Pty Ltd; Fifth Defendant: Diane Louise Townshend, as Legal Representative for the Estate of Vernon Thomas Townshend; Sixth Defendant: VT Nominees Pty Ltd as Trustee for the Vernon Townshend Family Trust No 2; Seventh Defendant: VBI Properties Pty Ltd; Eighth Defendant: David Michael Townshend; Ninth Defendant: Canterbury Hills Pty Ltd; Tenth Defendant: Townshend Financial Services Pty Ltd; Eleventh Defendant: Townshend Financial Services (Vic) Pty Ltd
Jurisdiction
Australia
Judgment Date
19 July 2022
Procedural Posture
Corporations/commercial / Interlocutory Application for Derivative Leave and Leave to File Claims/cross Claims
Outcome
Leave granted for derivative claims and cross-claim; orders made for pleadings and security for costs.
Legal Topics
Derivative Action, Directors' Duties, Oppression Remedies, Fiduciary Duties, Shareholder Disputes, Intercompany Loans
Corporations Law Derivative Action Directors' Duties Oppression Remedies Fiduciary Duties Shareholder Disputes Intercompany Loans

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Parties

Patricia Joan Townshend as Legal Representative for the Estate of Mervyn Arthur Townshend

First Plaintiff

Mervyn T Nominees Pty Ltd as Trustee for the Mervyn Townshend Family Trust No 2

Second Plaintiff

Fendall Farms Pty Ltd

First Defendant

Sunnyacres Pty Ltd

Second Defendant

Kooringa Close (Management) Pty Ltd

Third Defendant

Fifty-One Glebe (Management) Pty Ltd

Fourth Defendant

Diane Louise Townshend, as Legal Representative for the Estate of Vernon Thomas Townshend

Fifth Defendant

VT Nominees Pty Ltd as Trustee for the Vernon Townshend Family Trust No 2

Sixth Defendant

VBI Properties Pty Ltd

Seventh Defendant

David Michael Townshend

Eighth Defendant

Canterbury Hills Pty Ltd

Ninth Defendant

Townshend Financial Services Pty Ltd

Tenth Defendant

Townshend Financial Services (Vic) Pty Ltd

Eleventh Defendant

Procedural Posture

Corporations/commercial / Interlocutory Application for Derivative Leave and Leave to File Claims/cross Claims

Legal Issues

  1. 1 Whether leave should be granted under s 237(2) of the Corporations Act 2001 (Cth) to bring derivative proceedings on behalf of Fendall Farms Pty Ltd and VBI Properties Pty Ltd
  2. 2 Whether the applicants acted in good faith in making derivative leave applications
  3. 3 Whether it is in the best interests of the company that leave be granted

Ratio Decidendi

The criteria for leave to bring derivative proceedings under s 237(2) of the Corporations Act 2001 (Cth) are satisfied, as the applicants acted in good faith, leave is in the best interests of the company, there is a serious question to be tried, Fendall Farms will not bring the proceedings itself, and notice requirements are met; derivative leave is accordingly granted for claims as pleaded, and leave is also granted to file cross-claims.

Court Disposition

Leave granted for derivative claims and cross-claim; orders made for pleadings and security for costs.

Orders

  • Second plaintiff has leave pursuant to s 237 of the Corporations Act to bring derivative claims on behalf of Fendall Farms Pty Ltd as pleaded.
  • Plaintiffs have leave to file and serve a statement of claim in specified form by 22 July 2022.