Re the President's Club Limited; Coeur De Lion Investments Pty Limited v Kelly

Coeur De Lion Investments Pty Limited (Coeur De Lion) sought leave to bring a statutory derivative action on behalf of the President's Club Limited (the company) against three of the four directors of the company. The company is an unlisted public company, and Coeur De Lion is a shareholder. The applicant sought leave to bring a proceeding to recover consultancy fees paid to the directors without member approval. The applicant contended that the payments were in breach of section 208(1) Corporations Act 2001 (Cth) or in breach of duty, and that the company was not likely to bring the proceedings against the directors. The court had to determine whether the applicant was acting in good faith and whether it was in the best interests of the company to grant leave to the applicant.

The court examined the evidence and submissions and found that there was a serious question to be tried about whether the payments were in breach of section 208(1) Corporations Act 2001 (Cth) or in breach of duty. However, the court also found that the applicant was not acting in good faith and that it was not in the best interests of the company to grant leave to the applicant. The court found that the applicant had acted in bad faith by bringing the proceedings in an attempt to influence the outcome of an election for directors of the company, and that the applicant had not disclosed all relevant information to the court. The court also found that the company was not likely to bring the proceedings against the directors, but that this was not the only factor to be considered in determining whether it was in the best interests of the company to grant leave to the applicant.

The application filed on 18 May 2010 is dismissed. The court found that the applicant was not acting in good faith and that it was not in the best interests of the company to grant leave to the applicant. The court did not find it necessary to make any orders as to costs.