Henry v Western Downs Group Limited

In the matter of Henry v Western Downs Group Limited, the applicants sought leave to bring proceedings on behalf of Western Downs, a company limited by guarantee established as a charitable trustee. The applicants, native title holders, alleged that the directors of Western Downs committed or were knowingly concerned in a breach of fiduciary duty by misappropriating trust moneys. The applicants argued that it was in the best interests of Western Downs that they be granted leave to bring the proceedings in its name.

The primary legal issue for the court to decide was whether the applicants met the conditions set out in section 237(2) of the Corporations Act 2001 (Cth) for leave to be granted. Specifically, the court had to determine whether it was probable that Western Downs would not bring the proceedings, whether the applicants were acting in good faith, and whether it was in the best interests of Western Downs that the applicants be granted leave to bring the proceedings.

The court held that it was probable that Western Downs itself would not bring or properly take responsibility for the claims that the applicants wished to bring in its name, as the board of Western Downs had not effectively functioned since early 2014. The court also found that the applicants were acting in good faith and that it was in the best interests of Western Downs that the applicants be granted leave to bring the proceedings in its name. The court deferred making orders until the parties had an opportunity to address on what, if any, conditions should be imposed on the applicants in respect of how Western Downs is to prosecute the proceeding and to give the Attorney-General the opportunity to consider what, if any, steps she wishes to take in that regard.

The court ordered that the Attorney-General for the State of Queensland be granted leave to intervene in the proceeding for the purposes of making submissions, that the applicants on the amended originating application have leave to substitute Elizabeth Johnston for Matthew Queary as an applicant in the proceeding, that all parties have leave to inspect and make copies of any documents produced on subpoena, that any requirement to file any defences that have not been satisfied be stayed until further order, and that the matter be stood over for case management.