Noah's Ark Veterinary Services Pty Ltd v Hudson

FEDERAL COURT OF AUSTRALIA

Noah’s Ark Veterinary Services Pty Ltd v Hudson [2023] FCA 1094

File number:

NSD 562 of 2023

Judgment of:

PERRAM J

Date of judgment:

15 September 2023

Catchwords:

CORPORATIONS – application for leave to bring derivative suit on behalf of company – where concurrent family law proceedings before Federal Circuit and Family Court of Australia (Division 2) – whether criteria for leave under s 237 of the Corporations Act 2001 (Cth) satisfied – whether applicant acting in good faith – whether grant of leave in best interests of company

Legislation:

Corporations Act 2001 (Cth) ss 236(1)(a), 237

Cases cited:

Calderbank v Calderbank [1975] 3 All ER 333

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

Williams v Spautz (1992) 174 CLR 509

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Corporations and Corporate Insolvency

Number of paragraphs:

90

Date of hearing:

28-29 August 2023

Counsel for the Second Plaintiff:

Mr D Parish

Solicitor for the Second Plaintiff:

Keystone Lawyers

Counsel for the Defendants:

Mr M Baroni

Solicitor for the Defendants:

Mills Oakley

ORDERS

NSD 562 of 2023

BETWEEN:

NOAH’S ARK VETERINARY SERVICES PTY LTD (ACN 102 031 425)

First Plaintiff

DONALD HUDSON

Second Plaintiff

AND:

ILONA DEBORAH HUDSON

First Defendant

VICTORIA IRELAND

Second Defendant

MOVE UNLEASHED PTY LTD (ACN 656 525 030)

Third Defendant

ORDER MADE BY:	PERRAM J
DATE OF ORDER:	15 SEPTEMBER 2023

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The parties provide mutually available dates for a hearing on costs to the Associate to Perram J by 4.00 pm on 22 September 2023.

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

REASONS FOR JUDGMENT

PERRAM J:

Introduction

1. Donald Hudson is a shareholder in Noah’s Ark Veterinary Services Pty Ltd (‘Noah’s Ark’). The question is whether the Court should grant him leave pursuant to s 237 of the Corporations Act 2001 (Cth) to bring proceedings on behalf of Noah’s Ark against its directors. Noah’s Ark conducts business as a provider of veterinary services at a practice situated at Medowie near Port Stephens in New South Wales. It has three shareholders each of whom holds 100 shares. The shareholders are Donald Hudson (a veterinary surgeon), his former wife Ilona Hudson (also a veterinary surgeon) and Victoria Ireland, the practice manager. I will refer to the shareholders without disrespect as Donald, Ilona and Victoria. The current directors of Noah’s Ark are Ilona and Victoria.

2. As a shareholder Donald is entitled to make this application: ss 236(1)(a) and 237(1). If Donald satisfies the Court of the criteria set out in s 237(2) it must grant him the leave he seeks. Section 237(2) provides:

   (2)      The Court must grant the application if it is satisfied that:

   (a)it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

   (b)the applicant is acting in…