Re Junior Academy ELC Pty Ltd (No 3) - [2019] VSC 161

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS’ LIST

S ECI 2017 00222

RE JUNIOR ACADEMY ELC PTY LTD (ACN 136 704 697)

BETWEEN

PETER URBAN	Plaintiff
v
JUNIOR ACADEMY ELC PTY LTD (AS TRUSTEE FOR THE GLEN EIRA ROAD (249) UNIT TRUST) & ORS (according to the attached schedule)	Defendants

AND

S CI 2017 04273

RE JUNIOR ACADEMY ELC PTY LTD (ACN 136 704 697)

BETWEEN

BARCOCHVA (COCO) LAHMY & ORS (according to the attached schedule)	Plaintiffs
and
JUNIOR ACADEMY ELC PTY LTD (AS TRUSTEE FOR THE GLEN EIRA ROAD (249) UNIT TRUST) & ORS (according to the attached schedule)	Defendants

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 and 5 March 2019
DATE OF JUDGMENT:	5 March 2019 Ex tempore
CASE MAY BE CITED AS:	Re Junior Academy ELC Pty Ltd (No 3)
MEDIUM NEUTRAL CITATION:	[2019] VSC 161

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CORPORATIONS – Application under s 237 of the Corporations Act 2001 (Cth) by a director of the defendant company for leave to bring proceedings in the name of the defendant company against a fellow director – Allegations of breach of duty as a director – Consideration of character and position of the applicant in the defendant company in deciding whether it is in the best interests of the company that the applicant be granted leave – Held that applicant should not be granted leave – Macralink Pty Ltd v Saris [2011] VSC 665 applied.

CORPORATIONS – Application to wind up the defendant company by the fellow director sought to be sued – Application adjourned to enable the relevant parties to consider their position.

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APPEARANCES:	Counsel	Solicitors
In proceeding S ECI 2017 00222:
For the Plaintiff	Mr M I Borsky QC with Mr G Kozminsky	Marsh & Maher Richmond Bennison
For the Defendant	Mr J W S Peters QC with Dr O Bigos	Jack Bock Lawyers
In proceeding S CI 2017 04273:
For the Plaintiffs	Mr J W S Peters QC with Dr O Bigos	Jack Bock Lawyers
For the Second to Fourth Defendants	Mr M I Borsky QC with Mr G Kozminsky	Marsh & Maher Richmond Bennison

HIS HONOUR:
Derivative leave application

By summons dated 12 September 2017, Mr Urban applies pursuant to s 237 of the Corporations Act 2001 (Cth) (‘the Act’), that he be granted leave to bring a proceeding on behalf of and in the name of Junior Academy ELC Pty Ltd (formerly known as Coco’s Early Learning Centre Pty Ltd) (‘Junior Academy’) as trustee for the Glen Eira Road (249) Unit Trust (‘Glen Eira Road Unit Trust) against Mr and Mrs Lahmy, in the form set out in the draft statement of claim.[1]
[1] Exhibit ADSW 10 to the affidavit of Amy Dawn sworn 14 November 2017.

Section 236 of the Act provides for bringing, or intervening in, proceedings on behalf of a company, and states as follows:

(1)A person may bring proceedings on behalf of a company, or intervene in any proceedings to which…

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.

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Details

Case: [2019] VSC 161
Decision Date: 5 March 2019 Ex tempore

CaseChat Overview and Summary

In the matter of Junior Academy ELC Pty Ltd (No 3), the court was called upon to decide an application by a director of the defendant company, Junior Academy ELC Pty Ltd, for leave to bring proceedings in the name of the company against another director. The applicant director sought to sue the respondent director for alleged breaches of duty as a director. The legal issues before the court involved determining whether it was in the best interests of the company for the applicant director to be granted leave to sue, and whether the application to wind up the company by the respondent director should proceed.

The court considered the character and position of the applicant within the company, as well as the broader interests of the company. The decision was influenced by the case of Macralink Pty Ltd v Saris, where the court had outlined the considerations for granting leave to bring proceedings in the name of a company. The court found that the applicant's position and actions did not align with the best interests of the company, and therefore, the applicant should not be granted leave to bring the proceedings. The court also noted the application to wind up the company by the respondent director and decided to adjourn this application to allow the relevant parties to consider their positions.

The final outcome of the case was that the applicant director was not granted leave to bring the proceedings against the respondent director, and the application to wind up the company was adjourned. This decision was based on the court's assessment of the applicant's role and actions within the company, and the broader implications for the company's interests. The court's reasoning and outcome were grounded in established legal principles and precedents, ensuring that the best interests of Junior Academy ELC Pty Ltd were protected in the proceedings.

Orders