Aroo K Pty Ltd v Devils@Cradle Pty Ltd - [2021] FCA 1002

FEDERAL COURT OF AUSTRALIA
Aroo K Pty Ltd v Devils@Cradle Pty Ltd [2021] FCA 1002

File number(s): TAD 22 of 2021

Judgment of: O'CALLAGHAN J

Date of judgment: 18 August 2021

Catchwords: CORPORATIONS – application under s 237 of the Corporations Act 2001 (Cth) for leave to bring a proceeding on behalf of a company – application granted

Legislation: Corporations Act 2001 (Cth) ss 236, 237, 237(2)(e)(ii)

Cases cited:
Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd (2017) 54 VR 625

Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577

Chan vZachariah (1984) 154 CLR 178

Fiduciary Ltd v Morningstar Research Pty Ltd [2005] NSWSC 442; (2005) 53 ACSR 732

Goozee v Graphic World Group Holdings Pty Ltd (2002) 170 FLR 451

Management Service Australia Pty Ltd v PM Works Pty Ltd [2017] NSWSC 1743

Rae & Partners Pty v Shaw [2020] TASFC 14

Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313

United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1

Division: General Division

Registry: Tasmania

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Number of paragraphs: 30

Date of hearing: 18 August 2021

Counsel for the Applicants: Mr S McElwaine SC

Counsel for the First Respondent: The First Respondent did not appear

Solicitor for the Second and Third Respondents: Mr C Groves of Dobson Mitchell Allport

ORDERS

TAD 22 of 2021

BETWEEN:
AROO K PTY LTD

First Applicant

ANDROO KELLY

Second Applicant

AND:
DEVILS@CRADLE PTY LTD

First Respondent

WADE JOHN ANTHONY

Second Respondent

CRADLE VIEW PTY LTD

Third Respondent

ORDER MADE BY:

O'CALLAGHAN J

DATE OF ORDER:

18 AUGUST 2021

THE COURT ORDERS THAT:
1.Pursuant to s 237 of the Corporations Act 2001 (Cth), leave be granted to Aroo K Pty Ltd and Androo Kelly to bring a proceeding in the name of Devils@Cradle Pty Ltd against Cradle View Pty Ltd and Wade John Anthony substantially in the form of the draft statement of claim annexed to the affidavit of Androo Kelly affirmed 16 June 2021, including Devils@Cradle Pty Ltd as the third applicant.
2.Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
O’CALLAGHAN J:

I made the orders recorded above after hearing from counsel. These are my reasons.
This is an application by Mr Androo Kelly (Mr Kelly) and Aroo K Pty Ltd (Aroo) for leave pursuant to s 237 of the Corporations Act 2001 (Cth) to bring a proceeding in the name of Devils@Cradle Pty Ltd (Devils@Cradle) (in addition to themselves) against Cradle View Pty Ltd (Cradle View) and Mr Wade Anthony (Mr Anthony), substantially in the form of a draft statement of claim prepared by Mr McElwaine SC, annexed to an affidavit sworn by Mr Kelly in support of the application.
The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Aroo K Pty Ltd v Devils@Cradle Pty Ltd

Details

AGLC: Aroo K Pty Ltd v Devils@Cradle Pty Ltd [2021] FCA 1002
Case: [2021] FCA 1002
Decision Date: 18 August 2021

CaseChat Overview and Summary

Aroo K Pty Ltd, along with Androo Kelly, applied for leave under section 237 of the Corporations Act 2001 (Cth) to bring a proceeding on behalf of Devils@Cradle Pty Ltd against Cradle View Pty Ltd and Wade John Anthony. The application was heard in the Federal Court of Australia. The central dispute involved allegations of breaches of fiduciary duties, misrepresentation, and other corporate misconduct.

The court was required to determine whether the application met the criteria for granting leave under section 237 of the Corporations Act. Specifically, the court had to assess if the applicants had a bona fide interest in the proceeding and if there were any circumstances that made it just and equitable to grant leave. The court also considered whether the application presented a serious question to be tried and if it was in the interest of justice to grant leave.

The court found that the applicants had established a bona fide interest in the proceeding and that there were serious questions to be tried. The court concluded that it was just and equitable to grant leave for the proceeding to be brought on behalf of Devils@Cradle Pty Ltd. The court further determined that the application presented a matter of significant importance and that granting leave was in the interest of justice.

The court granted leave to Aroo K Pty Ltd and Androo Kelly to bring the proceeding in the name of Devils@Cradle Pty Ltd against Cradle View Pty Ltd and Wade John Anthony. Costs were reserved for further determination. The court's decision was in line with the criteria set out in section 237 of the Corporations Act, ensuring that the proceeding could proceed with the necessary authorisation.

Orders

Orders of the court

1. Pursuant to s 237 of the Corporations Act 2001 (Cth), leave be granted to Aroo K Pty Ltd and Androo Kelly to bring a proceeding in the name of Devils@Cradle Pty Ltd against Cradle View Pty Ltd and Wade John Anthony substantially in the form of the draft statement of claim annexed to the affidavit of Androo Kelly affirmed 16 June 2021, including Devils@Cradle Pty Ltd as the third applicant.

2. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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File number(s):	TAD 22 of 2021
Judgment of:	O'CALLAGHAN J
Date of judgment:	18 August 2021
Catchwords:	CORPORATIONS – application under s 237 of the Corporations Act 2001 (Cth) for leave to bring a proceeding on behalf of a company – application granted
Legislation:	Corporations Act 2001 (Cth) ss 236, 237, 237(2)(e)(ii)
Cases cited:	Adventure Golf Systems Australia Pty Ltd v Belgravia Health & Leisure Group Pty Ltd (2017) 54 VR 625 Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577 Chan vZachariah (1984) 154 CLR 178 Fiduciary Ltd v Morningstar Research Pty Ltd [2005] NSWSC 442; (2005) 53 ACSR 732 Goozee v Graphic World Group Holdings Pty Ltd (2002) 170 FLR 451 Management Service Australia Pty Ltd v PM Works Pty Ltd [2017] NSWSC 1743 Rae & Partners Pty v Shaw [2020] TASFC 14 Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
Division:	General Division
Registry:	Tasmania
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	30
Date of hearing:	18 August 2021
Counsel for the Applicants:	Mr S McElwaine SC
Counsel for the First Respondent:	The First Respondent did not appear
Solicitor for the Second and Third Respondents:	Mr C Groves of Dobson Mitchell Allport

ORDER MADE BY:	O'CALLAGHAN J
DATE OF ORDER:	18 AUGUST 2021