Legal Research
Cases
Re Dynamic Industries Pty Ltd

Re Dynamic Industries Pty Ltd

Case [2014] VSC 101 20 March 2014

Standing

Derivative Action

Good Faith

Best Interests of Company

Corporate Law & Governance

No judgment structure available for this case.

Type to search within this case.

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 5411 of 2013

IN THE MATTER OF
DYNAMIC INDUSTRIES PTY LTD (ACN 056 989 809)

BETWEEN:

EDWARD BORCZYK

SEB NOMINEES PTY LTD (ACN 066 964 449)

and

WILLIAM VAN ROOY

DYNAMIC INDUSTRIES PTY LTD (ACN 056 989 809)

Plaintiffs

Defendants

---

JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 March 2014
DATE OF JUDGMENT:	20 March 2014
CASE MAY BE CITED AS:	Re Dynamic Industries Pty Ltd
MEDIUM NEUTRAL CITATION:	[2014] VSC 101

---

CORPORATIONS – Derivative action – Leave to commence – Good faith – Best interests of company – Undertaking to meet costs of company – Corporations Act 2011 (Cth) s 237.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr GJ McEwan	Obst Legal
For the Defendants	Mr MP Guthrie	Slater & Gordon

CASES REFERRED TO

Chahwan v Euphoric Pty Ltd (2008) 245 ALR 780
Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) Unreported, New South Wales Supreme Court, Young J 24 July 1984
Edelsten v Main and Graywater Recycler International Pty Ltd [2013] VSC 270
Goozee v Graphic World Group Holdings Pty Ltd (2002) 170 FLR 451
Jones v Dunkel (1959) 101 CLR 298
Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2005] NSWSC 859
Re Poly Pacific Pty Ltd [2013] VSC 670
Roach v Winnote Pty Ltd (2006) 227 ALR 758
South Johnstone Mill Ltd v Dennis (2007) 163 FCR 343
Suh v Cho [2013] VSC 491
Swansson v R A Pratt Properties Pty Ltd [2002] NSWSC 583; (2002) 42 ACSR 313
Texxcon Pty Ltd v Austexx Corporation Pty Ltd [2011] VSC 203
True Value Solar Holdings Pty Ltd v Fernandez [2013] VSCA 27
Wood v Links Golf Tasmania Pty Ltd (No 2) [2013] FCA 143

TABLE OF CONTENTS

Introduction............................................................................................................................... 2
The evidence............................................................................................................................... 4
The proposed claim................................................................................................................... 14
Summary of relevant legal principles........................................................................................ 17
Is it probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them?................................................................................................................ 22
Are the plaintiffs acting in good faith?..................................................................................... 23
Is it in the best interests of the company that the plaintiffs be granted leave?........................... 26
Is there is a serious question to be tried?................................................................................... 28
Has appropriate notice been given or is it otherwise appropriate to grant leave?...................... 30
Conclusion............................................................................................................................... 30

HIS HONOUR:

Introduction

Edward Borczyk, the first plaintiff, and SEB Nominees Pty Ltd (SEB), the second plaintiff, seek leave under s 237 of the Corporations Act 2001 (Cth) (the Act) to commence a proceeding in the name of the second defendant Dynamic Industries Pty Ltd (Dynamic) against William Van Rooy, the first defendant, and Guilfoyle Wreckers Pty Ltd (Guilfoyle), in substantially the same form as the proposed statement of claim exhibited to the affidavit of Mr Borczyk affirmed 14 October 2013.

Part 2F.1A of the Act deals with proceedings on behalf of a company by members and others. Section 236 of that Part provides:

(1)A…

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 Re Dynamic Industries Pty Ltd

Details

AGLC: Re Dynamic Industries Pty Ltd [2014] VSC 101
Case: [2014] VSC 101
Decision Date: 20 March 2014

CaseChat Overview and Summary

In the case of Re Dynamic Industries Pty Ltd, the court was asked to consider whether the applicant had the right to proceed with a derivative action on behalf of the company. The applicant sought to bring proceedings against the directors of the company for breaches of their duties and mismanagement, claiming that the company had suffered significant financial losses as a result. The court was required to decide whether the applicant had acted in good faith and whether the proceedings were in the best interests of the company. Additionally, the court had to consider the applicant's undertaking to meet the company's costs if the proceedings were unsuccessful.

The court examined the criteria set out in the Corporations Act 2011 for granting leave to commence a derivative action. It found that the applicant had demonstrated that they had acted in good faith and that the proceedings were in the best interests of the company. The court also noted the applicant's undertaking to meet the company's costs if the proceedings were unsuccessful, which it considered a significant factor in favour of granting leave. The court concluded that the applicant had met the necessary threshold for leave to proceed with the derivative action.

Consequently, the court granted the applicant leave to commence the derivative action on behalf of the company. The court emphasised that the proceedings would be closely monitored to ensure they remained in the best interests of the company and that any costs incurred by the company would be recovered from the applicant if the proceedings were unsuccessful. The final orders included the granting of leave for the applicant to commence the derivative action, subject to certain conditions to protect the interests of the company and its shareholders.

Orders