JUDGE:	Waller J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 May 2024
DATE OF RULING:	17 June 2024
CASE MAY BE CITED AS:	Re Stirloch Constructions Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 322

---

CORPORATIONS — Derivative action — Corporations Act 2001 (Cth) ss 236 and 237 —Application by director of company for leave to bring proceeding — Alleging breaches of fiduciary and statutory duties by another director and knowing assistance by other parties — Factors under s 237(2) considered — Whether good faith, best interests and serious question requirements met — Leave granted.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	M McNamara	CIE Legal
For the Second and Fourth Defendants	D McAloon	Piper Alderman

HIS HONOUR:

A. INTRODUCTION

The Plaintiff, Mr Harold McIntosh, applies under s 237 of the Corporations Act 2001 (Cth) (‘Corporations Act’) for leave to bring a proceeding (‘Proposed Proceeding’) on behalf of Stirloch Constructions Pty Ltd (‘StirCon’) against a director and former director of StirCon and a company incorporated by them.[1]
[1]Originating Process filed by the Plaintiff on 3 November 2023, [1].

The Plaintiff is a director of StirCon.

The Proposed Proceeding would be brought by StirCon against:

(a) Wayne Peter Loechel (the Second Defendant);

(b) Stirloch Group Pty Ltd (the Third Defendant); and

(c) Peter Richard Geurts (the Fourth Defendant).

In broad terms, the Proposed Proceeding would allege that Mr Loechel breached his director’s duties and fiduciary duties owed to StirCon and that StirGroup and Mr Geurts knowingly assisted Mr Loechel to breach his fiduciary duties.

The Plaintiff relies on the following affidavits in support of his application:

(a) affidavit of Harold John McIntosh sworn 3 November 2023;

(b) affidavit of Mark Waters affirmed 6 November 2023;

(c) affidavit of Harold John McIntosh sworn 21 December 2023;

(d) affidavit of Harold John McIntosh sworn 20 March 2024; and

(e) affidavit of Harold John McIntosh sworn 20 May 2024.

In opposition to the application, the Second and Fourth Defendants rely on the following affidavits:

(a) affidavit of Wayne Peter Loechel sworn 27 February 2024;

(b) affidavit of Dallas Richard Gist sworn 27 February 2024;

(c) affidavit of Wayne Peter Loechel sworn 6 March 2024; and

(d) affidavit of Wayne Peter Loechel sworn 17 May 2024.

There was no cross-examination of any deponent.

For the reasons set out below, I have concluded that the Plaintiff should have leave to bring the Proposed Proceeding on behalf of StirCon.

B. FACTUAL BACKGROUND[2]

[2]The facts set out below are drawn predominantly from the Statement of Agreed Facts submitted by the Plaintiff on 20 May 2024.

Mr McIntosh has a background in engineering and construction.[3] In or around 1995, he met…

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 Stirloch Constructions Pty Ltd

Details

AGLC: Re Stirloch Constructions Pty Ltd [2024] VSC 322
Case: [2024] VSC 322
Decision Date: 17 June 2024

CaseChat Overview and Summary

Re Stirloch Constructions Pty Ltd involved a derivative action brought by a director of the company against another director and other parties. The plaintiff sought leave to bring the proceeding on behalf of the company, alleging breaches of fiduciary and statutory duties by the other director, as well as knowing assistance by the other parties. The case was heard by the Federal Court, which was required to determine whether the plaintiff met the statutory requirements for leave to bring a derivative action under the Corporations Act 2001 (Cth).

The court examined the relevant statutory provisions, particularly sections 236 and 237, which outline the criteria for granting leave to bring a derivative action. The key factors considered by the court included whether the plaintiff had acted in good faith, whether the proceeding was in the best interests of the company, and whether there was a serious question to be tried. The court carefully weighed these factors in the context of the allegations made by the plaintiff, ultimately concluding that the plaintiff had demonstrated a genuine concern for the company’s interests and had presented a plausible case that warranted further investigation.

Having satisfied itself that the requirements for leave were met, the court granted the plaintiff's application. The court found that the plaintiff had acted in good faith, that the derivative action was in the best interests of the company, and that there was a serious question to be tried concerning the alleged breaches of duty. The court's decision enabled the proceeding to proceed, allowing the company to address the alleged misconduct through the legal process.

The final orders of the court included granting the plaintiff leave to bring the derivative action on behalf of Stirloch Constructions Pty Ltd and directing the parties to comply with the procedural requirements set out in the Corporations Act. The court also scheduled a further hearing to manage the progression of the case.

Orders