The Derivative Suit 
TUTORIAL 9
Question 1 page 650 LHW
Question 2 page 650 LHW Question 1
-Member Remedies
-S232: S234 application can be made to the court (by a member –S231m assume Rodney is on the Register of Members)
“Conduct of the company’s affairs is contrary to the interests of the members is oppressive, unfairly prejudicial, or unfairly discriminatory”
Wayde V NSWRL (it was held that a single resolution of the board of directors could be an oppressive or unfair act on behalf of the company. The conduct could also consist of an act that is merely proposed and has not yet occurred s232(1)(b))
“affairs defined s53 (broad)
i) Diversion of Profits
Unfair exclusion from profits Burland v Earle
Bonuses, salaries, cars? Sanford v Sanford Couriers , Shamsallah V CBD Airconditioning
“pattern of conduct” amounts to oppressive conduct – aimed at Rodney
ii)Diversion of Corporate opportunity
Re Bright Pine Mills
Scottish Co-opeative v Meyer pg616.17.75 deemed to amount to oppressive conduct
iii)Directors fail to act in the interests of the company
Dynasty P/L v Coombs
Cook v Deeks no benefit to the company, acting in own interests, therefore, breach of fiduciary duty; consequently , acting oppressively
iv) Exclusion from Management
GFS Management v Ground and Foundation Supports
Ebrahimi v Westborune Galleries unfair, especially if contrary to perceived understanding management is to be shared
Remedies : S233- Purchase shares, winding- up; appoint a receiver, institute legal proceedings, injunction
S461- winding up
S467 (4) – instruction to court
-Notice?
Procedural irregularity – “substantial injustice”
Bell v Turnbridge
Chew Inv v General Corp of Australia
:invalid S1322
-Ratification?
Fraud on the minority
Cook v Deeks
-Refusal by company to initiate legal action against directors
Derivative action : s236
:s236 (1)- Asset is a shareholder, has status to apply to the court
:must obtain leave of the court to take action on
Question 1 page 650 LHW
Question 2 page 650 LHW Question 1
-Member Remedies
-S232: S234 application can be made to the court (by a member –S231m assume Rodney is on the Register of Members)
“Conduct of the company’s affairs is contrary to the interests of the members is oppressive, unfairly prejudicial, or unfairly discriminatory”
Wayde V NSWRL (it was held that a single resolution of the board of directors could be an oppressive or unfair act on behalf of the company. The conduct could also consist of an act that is merely proposed and has not yet occurred s232(1)(b))
“affairs defined s53 (broad)
i) Diversion of Profits
Unfair exclusion from profits Burland v Earle
Bonuses, salaries, cars? Sanford v Sanford Couriers , Shamsallah V CBD Airconditioning
“pattern of conduct” amounts to oppressive conduct – aimed at Rodney
ii)Diversion of Corporate opportunity
Re Bright Pine Mills
Scottish Co-opeative v Meyer pg616.17.75 deemed to amount to oppressive conduct
iii)Directors fail to act in the interests of the company
Dynasty P/L v Coombs
Cook v Deeks no benefit to the company, acting in own interests, therefore, breach of fiduciary duty; consequently , acting oppressively
iv) Exclusion from Management
GFS Management v Ground and Foundation Supports
Ebrahimi v Westborune Galleries unfair, especially if contrary to perceived understanding management is to be shared
Remedies : S233- Purchase shares, winding- up; appoint a receiver, institute legal proceedings, injunction
S461- winding up
S467 (4) – instruction to court
-Notice?
Procedural irregularity – “substantial injustice”
Bell v Turnbridge
Chew Inv v General Corp of Australia
:invalid S1322
-Ratification?
Fraud on the minority
Cook v Deeks
-Refusal by company to initiate legal action against directors
Derivative action : s236
:s236 (1)- Asset is a shareholder, has status to apply to the court
:must obtain leave of the court to take action on