In the matter of Yinsanity Pty Ltd [2019] NSWSC 1290

In the matter of Yinsanity Pty Ltd [2019] NSWSC 1290

Leave under s 237 of the Corporations Act 2001 (Cth) was granted because the Court was satisfied that Yinsanity Pty Ltd was unlikely to bring the proceedings itself given the deadlock between its two statutory directors; Mr Lee was acting in good faith as a substantial shareholder seeking recovery for the company; the proceedings were in Yinsanity's best interests because they were a means of restoring value to a company whose business assets had allegedly been diverted and Mr Lee undertook to fund and indemnify the company for costs; there were serious questions to be tried concerning diversion of assets and customers, breach of directors' duties and fiduciary duties, and relief by...

Jurisdiction
Australia
Judgment Date
19 September 2019
Procedural Posture
Application for Leave Under S 237 of the Corporations Act 2001 (cth) to Bring Proceedings in the Name of a Company / Principal Judgment on Originating Process
Outcome
Leave granted to the Second Plaintiff to bring proceedings on behalf of Yinsanity Pty Ltd under s 237 of the Corporations Act 2001 (Cth).
Legal Topics
['statutory Derivative Action' "directors' Duties" 'fiduciary Duties' 'diversion of Corporate Assets' 'best Interests of Company' 'serious Question to Be Tried' 'indemnity for Costs']
['corporations' 'equity'] ['statutory Derivative Action' "directors' Duties" 'fiduciary Duties' 'diversion of Corporate Assets' 'best Interests of Company' 'serious Question to Be Tried' 'indemnity for Costs']

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Procedural Posture

Application for Leave Under S 237 of the Corporations Act 2001 (cth) to Bring Proceedings in the Name of a Company / Principal Judgment on Originating Process

Legal Issues

  1. 1 ['Whether it was probable that Yinsanity Pty Ltd would not itself bring the proposed proceedings unless leave was granted.' 'Whether Mr Lee was acting in good faith in seeking leave to bring proceedings on behalf of Yinsanity Pty Ltd.' 'Whether granting leave was in the best interests of Yinsanity Pty Ltd.' 'Whether there was a serious question to be tried in the proposed proceedings.' 'Whether the notice requirement for an application under s 237 of the Corporations Act 2001 (Cth) was satisfied.']

Ratio Decidendi

Leave under s 237 of the Corporations Act 2001 (Cth) was granted because the Court was satisfied that Yinsanity Pty Ltd was unlikely to bring the proceedings itself given the deadlock between its two statutory directors; Mr Lee was acting in good faith as a substantial shareholder seeking recovery for the company; the proceedings were in Yinsanity's best interests because they were a means of restoring value to a company whose business assets had allegedly been diverted and Mr Lee undertook to fund and indemnify the company for costs; there were serious questions to be tried concerning diversion of assets and customers, breach of directors' duties and fiduciary duties, and relief by...

Court Disposition

Leave granted to the Second Plaintiff to bring proceedings on behalf of Yinsanity Pty Ltd under s 237 of the Corporations Act 2001 (Cth).

Orders

  • ["On the undertaking of the Second Plaintiff, Mr Bon Bon Lee, to pay the First Plaintiff's costs incurred in the conduct of the proceedings, and to indemnify the First Plaintiff against any adverse costs order, grant leave to the Second Plaintiff under s 237 of the Corporations Act 2001 (Cth) to commence proceedings...