South Johnstone Mill Ltd v Dennis and Scales [2007] FCA 1448

South Johnstone Mill Ltd v Dennis and Scales [2007] FCA 1448

The absence of leave to commence derivative proceedings under s 237 of the Corporations Act 2001 (Cth) is not fatal to the court’s jurisdiction; leave may be granted nunc pro tunc if the statutory criteria are established. On the evidence, 31 of the applicants have standing as members or former members. The evidence satisfies s 237(2): the company will not bring proceedings (no directors; no assets), applicants act in good faith (willing to indemnify for costs, substantial shareholding), litigation is in company’s best interests (serious question to be tried regarding alleged sale at undervalue by Receivers, potential monetary benefit, applicants bear costs), and there is a serious...

Parties
Applicants: South Johnstone Mill Limited (ACN 101 695 575) & Others According to the Attached Schedule; First Respondents: Richard John Dennis & Michael Scales; Second Respondent: National Australia Bank (ACN 004 044 987)
Jurisdiction
Australia
Judgment Date
14 September 2007
Procedural Posture
Corporations—derivative Action—interlocutory Application / Application for Leave to Continue Derivative Proceedings Under S 237 Corporations Act 2001 (cth)
Outcome
Leave granted nunc pro tunc to 31 named applicants to proceed against Receivers; application against Bank dismissed; further orders as to cost and future directions to be settled by parties.
Legal Topics
Derivative Actions, Standing of Applicants, Leave Nunc Pro Tunc, Duties of Receivers, Agency, Sale of Company Assets, Breach of Statutory Duties, Good Faith, Best Interests of Company, Evidence Admissibility (hearsay)
Corporations Law Derivative Actions Standing of Applicants Leave Nunc Pro Tunc Duties of Receivers Agency Sale of Company Assets Breach of Statutory Duties +3 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 31 Party arguments 2 Amounts and remedies 8
Sign in to unlock

Parties

South Johnstone Mill Limited (ACN 101 695 575) & Others According to the Attached Schedule

Applicants

Richard John Dennis & Michael Scales

First Respondents

National Australia Bank (ACN 004 044 987)

Second Respondent

Procedural Posture

Corporations—derivative Action—interlocutory Application / Application for Leave to Continue Derivative Proceedings Under S 237 Corporations Act 2001 (cth)

Legal Issues

  1. 1 Whether the applicants should be granted leave nunc pro tunc under s 237 of the Corporations Act 2001 (Cth) to continue proceedings commenced on behalf of the company
  2. 2 Whether relevant criteria in s 237(2) are satisfied (company not bringing proceedings, good faith, best interests, serious question to be tried, notice)
  3. 3 Whether leave nunc pro tunc is available for commenced proceedings without prior leave

Ratio Decidendi

The absence of leave to commence derivative proceedings under s 237 of the Corporations Act 2001 (Cth) is not fatal to the court’s jurisdiction; leave may be granted nunc pro tunc if the statutory criteria are established. On the evidence, 31 of the applicants have standing as members or former members. The evidence satisfies s 237(2): the company will not bring proceedings (no directors; no assets), applicants act in good faith (willing to indemnify for costs, substantial shareholding), litigation is in company’s best interests (serious question to be tried regarding alleged sale at undervalue by Receivers, potential monetary benefit, applicants bear costs), and there is a serious...

Court Disposition

Leave granted nunc pro tunc to 31 named applicants to proceed against Receivers; application against Bank dismissed; further orders as to cost and future directions to be settled by parties.

Orders

  • The parties confer and file and serve within 7 days draft minutes of orders reflecting the reasons and in respect of costs and any further directions sought.
  • The proceeding be adjourned to a date to be fixed.