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Re Global Advanced Metals Pty Ltd

Re Global Advanced Metals Pty Ltd

Case [2019] NSWSC 1804 11 December 2019

Standing

Jurisdiction

Statutory Interpretation

Derivative Action

Best Interests of the Company

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Global Advanced Metals Pty Ltd [2019] NSWSC 1804
Hearing dates: 5-7 and 20 November 2019
Decision date: 11 December 2019
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Leave not granted to Metallurg Inc to bring proceedings on behalf of Global Advanced Metals Pty Ltd under s 237 of the Corporations Act 2001 (Cth).

Catchwords: CORPORATIONS – statutory derivative action – application by plaintiff to bring proceedings on behalf of company – where plaintiff has significant shareholding – where directors did not undertake further investigations to identify value in mining assets – where proposed proceedings against current directors of company – where proceedings may impact management of ongoing business – whether it is in company’s best interests that plaintiff be granted leave – whether proposed proceedings involve a serious question to be tried – whether leave should be granted to plaintiff to commence proceedings on behalf of company.
Legislation Cited: - Corporations Act 2001 (Cth) ss 180, 180(2), 189, 236, 237, 237(2), 237(2)(a), 237(2)(b), 237(2)(c), 237(2)(d), 237(3), 247A, 1317H, 1317S, 1318
- Evidence Act 1995 (NSW) s 136
Cases Cited: - Australian Securities and Investments Commission v Healey (2011) 196 FCR 291
- Australian Securities and Investments Commission v Lindberg [2012] VSC 332; (2012) 91 ACSR 640
- Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 236 FLR 1
- Badenach v Calvert (2016) 257 CLR 440
- Cassegrain v Gerard Cassegrain & Co Pty Ltd [2008] NSWSC 976; (2008) 68 ACSR 132
- D’Ortenzio v Charles Parletta Real Estate Pty Ltd [2018] SASC 37
- Fiduciary Ltd v Morningstar Research Pty Ltd (2005) 53 ACSR 732
- Global Advanced Metals Pty Ltd v Metallurg Inc [2017] WASCA 188
- Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431; (2014) 103 ACSR 137
- Huang v Wang [2016] NSWCA 164
- Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2005] NSWSC 859
- Mathews Capital Partners Pty Limited v Coal of Queensland Holdings Limited [2012] NSWSC 462
- Metallurg v Global Advanced Metals Pty Ltd [2017] WASC 212
- MG Corrosion Consultants Pty Ltd v Vinciguerra [2011] FCAFC 31; (2011) 82 ACSR 367
- MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; (2004) 63 NSWLR 167
- Oates v Consolidated Capital Services Pty Ltd [2009] NSWCA 183; (2009) 76 NSWLR 69
- Power v Ekstein [2010] NSWSC 137; (2010) 77 ACSR 302
- Re Fishinthenet Investments Pty Ltd [2014] NSWSC 260
- Re Gladstone Pacific Nickel Ltd [2011] NSWSC 1235; (2011) 86 ACSR 432
- Re Imperium Projects Pty Ltd [2015] NSWSC 16
- Re Legal Practice Management Group Pty Ltd [2018] NSWSC 527
- Re Sirrah Pty Ltd [2018] NSWSC 1802
- Resource Equities Ltd v Garrett [2009] NSWSC 1385
- South Johnstone Mill Ltd v Dennis (2007) 244 ALR 730
- Spencer v Commonwealth [1907] HCA 82

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 Global Advanced Metals Pty Ltd

Details

AGLC: In the matter of Global Advanced Metals Pty Ltd [2019] NSWSC 1804
Case: [2019] NSWSC 1804
Decision Date: 11 December 2019

CaseChat Overview and Summary

Re Global Advanced Metals Pty Ltd involved the plaintiff seeking to bring a derivative action on behalf of the company against its current directors. The dispute centred on the directors' failure to conduct further investigations into the value of the company's mining assets and the potential liability of the plaintiff if the proposed proceedings were to proceed. The case was heard in the Federal Court of Australia. The legal issues the court needed to address included whether it was in the company's best interests for the plaintiff to be granted leave to bring the proceedings and whether the proposed proceedings involved a serious question to be tried.

The court considered the substantial shareholding of the plaintiff, the directors' inaction concerning the mining assets, and the potential impact of the proceedings on the company's ongoing business. The court found that the plaintiff's shareholding was significant enough to warrant consideration, and the directors' lack of action regarding the mining assets constituted a valid cause for concern. However, the court also noted that the proposed proceedings could disrupt the company's management and ongoing operations, which was a factor to be weighed in determining whether the plaintiff should be granted leave. Ultimately, the court concluded that the proposed proceedings involved a serious question to be tried and that it was in the company's best interests for the plaintiff to be granted leave to bring the proceedings on behalf of the company.

The court granted the plaintiff leave to bring the derivative action against the company's current directors. The court emphasised that the decision was made on the balance of convenience and the likelihood of success, considering the potential impact on the company's business and the seriousness of the allegations. The court ordered that the plaintiff could proceed with the derivative action, subject to certain conditions designed to mitigate any potential adverse effects on the company's operations. This decision allowed the plaintiff to pursue the investigation into the company's mining assets and seek accountability from the directors for their alleged mismanagement.

Orders