WAM Active Limited v Keybridge Capital Limited (No 2)

WAM Active Limited, a company involved in various investments, filed an application against Keybridge Capital Limited for winding up on insolvency grounds and to bring a derivative action. The matter was heard in the Supreme Court of Western Australia. WAM sought to wind up Keybridge, alleging that it was unable to pay its debts and had failed to comply with a statutory demand. Additionally, WAM sought leave to bring a derivative action against Keybridge's managing director for advancing a substantial sum to a foreign company he owned, without proper documentation or security.

The court was required to determine whether Keybridge was insolvent and, if so, whether this justified winding up the company. It also had to consider whether the advance to the managing director's company was lawful and, if not, whether WAM had established sufficient grounds for leave to bring a derivative action. Furthermore, the court needed to assess if the grant of leave to bring a derivative suit was an adequate remedy or if winding up the company on just and equitable grounds or due to oppressive conduct was warranted.

The court found that the presumption of insolvency arising from the failure to comply with the statutory demand was rebutted by expert evidence indicating that Keybridge was solvent. Therefore, the winding up application on insolvency grounds was dismissed. Regarding the derivative action, the court noted that the managing director's actions were irregular but concluded that the grant of leave to bring a derivative suit provided sufficient remedy, especially given Keybridge's solvency and profitability. The ongoing risk of mismanagement and asset dissipation was deemed insufficient to justify winding up the company. Consequently, the application for winding up on just and equitable grounds or due to oppressive conduct was rejected.

The court ordered that WAM's application to wind up Keybridge be dismissed. It also granted leave for WAM to bring a derivative action against the managing director of Keybridge, subject to certain conditions.