McLean & Anor v Lake Como Venture P/L & Anor; Lake Como Venture P/L & Ors v Progressive Projects P/L & Ors

[2003] QCA 562

Queensland Court of Appeal

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Interrogate

Catchwords

1. Corporations
2. › Constitution and legal capacity
3. › Internal disputes
4. › Statutory derivative action
5. › Leave to bring proceedings on behalf of company
6. › Whether in best interests of company
7. › Whether company necessary party as plaintiff
8. › Corporations Act 2001 (Cth), ss 236, 237
1. Corporations
2. › Constitution and legal capacity
3. › Internal disputes
4. › Use of company name
5. › Directors' resolution to commence proceedings
6. › Whether valid resolution where not unanimous
7. › Joint venture agreement requiring unanimity
8. › Corporations Act 2001 (Cth), ss 248A, 248G

Quick Take

The 'best interests of the company' test under s 237(2)(c) does not require a cost-benefit analysis of possible litigation outcomes. Where there is a serious question to be tried and realistic prospects of success, the risk of adverse costs orders, the availability of alternative remedies if the company were joined as defendant, and the possibility of conflict of interest are not sound bases for refusing leave. Section 236 envisages the company being joined as plaintiff rather than defendant. Leave may be conditioned on undertakings regarding the use of company funds for legal costs.