In the matter of Zoe Corporation Pty Limited

In the matter of Zoe Corporation Pty Limited, the respondent sought leave to bring a derivative action against the company and two other defendants. The applicant, a director of the company, alleged that the company had entered into a sham transaction involving the purchase of a property from a vendor, resulting in the company incurring a debt of $10 million under vendor finance. The applicant claimed that the company had been induced into the transaction by a sham offer to purchase the property for $20 million from a third party. The company had since defaulted on the loan, leading to the appointment of receivers. The applicant sought to bring the derivative action to recover the alleged losses.

The court had to determine whether the applicant was acting in good faith, as required under sections 236 and 237 of the Corporations Act 2001. The court examined the importance of an indemnity, the potential for the derivative suit to be for collateral purposes, and whether bringing the suit was in the best interests of the company. The court also considered whether the applicant was suitable to bring the derivative suit and whether the suit had merit. The applicant had failed to provide the company's books and records, a ROCAP report, and had not responded to a request for an indemnity from the receivers. The applicant had also been reported to ASIC, and the receivers were concerned that rent had been misappropriated to the company related to the applicant.

The court found that the applicant had not established the requirements of section 237 of the Corporations Act, and therefore, the application for leave to bring the derivative action was dismissed. The court emphasised the importance of the applicant acting in good faith, providing an indemnity, and demonstrating that the derivative suit was in the best interests of the company. The court also noted that the applicant had failed to provide necessary information and had not responded to requests for an indemnity, which further undermined the application.

The court made no orders as to costs.