Supreme Court New South Wales Medium Neutral Citation: In the matter of Zoe Corporation Pty Limited [2020] NSWSC 1431 Hearing dates: 25 September 2020 Date of orders: 25 September 2020 Decision date: 25 September 2020 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Refuse leave to bring derivative suit; dismiss application to restrain receivers and managers pending determination of application and derivative suit. Catchwords: CORPORATIONS – company owns 50% of land – company buys other 50% for $10M using vendor finance – loan in default – receivers appointed – application by director to bring derivative suit – vendor finance said to be induced by sham offer to buy property for $20M – director yet to provide books and records – director yet to provide report on company activities and property (ROCAP) – director reported to ASIC – receivers concerned rent misappropriated to company related to director – director declines to provide indemnity. CORPORATIONS – leave under ss 236 and 237 Corporations Act 2001 (Cth) – whether applicant acting in good faith – importance of indemnity – whether derivate suit for collateral purposes – whether in best interests of company – whether applicant suitable to bring derivative suit – whether derivative suit meritorious – applicant fails to establish requirements of s 237. Legislation Cited: Corporations Act 2001 (Cth), ss 236, 237, 237(2)(a), 237(2)(b), 429(2)(b) Cases Cited: Blakeney v Blakeney (2016) 113 ACSR 398; [2016] WASCA 76 Chahwan v Euphoric Pty Ltd (t/as Clay & Michel) [2008] NSWCA 52; (2008) 245 ALR 780 Charlton v Baber (2003) 47 ACSR 31 Cooper v Myrtace Consulting Pty Ltd [2014] FCA 480 Fiduciary Ltd v Morningstar Research Pty Ltd [2005] NSWSC 442 Fitzpatrick v Cheal [2010] NSWSC 717 Gerard Cassegrain & Co Pty Ltd v Cassegrain [2010] NSWSC 91 Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2005] NSWSC 859 Ragless v IPA Holdings Pty Ltd (in liq) (2008) 65 ACSR 700 Re Gladstone Pacific Nickel Limited (2011) 86 ACSR 432; [2011] NSWSC 1235 Roach v Winnote Pty Ltd [2006] NSWSC 231 South Johnstone Mill Ltd v Dennis and Scales (2007) 163 FCR 343; [2007] FCA 1448 Spies v R (2000) 201 CLR 603; 173 ALR 529; 35 ACSR 500 Sundara Pty Limited [2015] NSWSC 1694 Swansson [2002] NSWSC 583; (2002) 42 ACSR 313 Walker v Wimborne (1976) 137 CLR 1; 3 ACLR 529 Wood v Golf Links Tasmania (No 2) [2013] FCA 143 Texts Cited: Corporate Law Economic Reform Program Bill 1998 Category: Principal judgment Parties: Emade Semaan (Plaintiff) Said Jahani (First Defendant) Philip Campbell-Wilson (Second Defendant) Representation: Counsel: Mr A Rogers (Plaintiff) Mr M Rose (First and Second Defendants) Solicitors: Mitry Lawyers (Plaintiff) Pinsent Masons Lawyers (First and Second Defendants) File Number(s): 2020/230868 EX TEMPORE Judgment 1. HER HONOUR: This is an application by Emade Semaan for leave under section 236(1) of the Corporations Act 2001 (Cth) to prosecute proceedings on behalf of Zoe Corporation Pty Ltd. Mr Semaan is the sole director and shareholder of Zoe Corporation. The first and second defendants to this application are Said Jahani and Philip Campbell-Wilson, the joint and several receivers and managers of that company. Mr Semaan also seeks an order that the receivers and managers be restrained from exercising their powers as receivers pending determination of this application and the derivative suit. The receivers and managers oppose the relief sought. Facts 1. The proposed derivative suit stems from the ownership of a property in Mount Druitt by AZ Mt Druitt Pty Limited as trustee for Mount Druitt Unit Trust. At the relevant time, AZ Mt Druitt was owned 50 per cent by Zoe Corporation and 50 per cent by Abacus Funds Management Ltd. The units in the Mount Druitt Unit Trust were held 50:50 by Zoe Corporation and Abacus Funds. Mr Semaan was a director of AZ Mt Druitt, as was Frank Wolf of Abacus Funds. 2. Also at the time, Abacus Finance Pty Ltd had provided $1.35 million finance to Ayres Grove Pty Ltd under a Facility Agreement. Abacus Finance was a company related to Abacus Funds, whilst Mr Semaan was the sole director of Ayres Grove. Mr Semaan, his wife Mary Semaan and Zoe Corporation were guarantors of Ayres Grove's performance of the Facility Agreement. Zoe Corporation also executed a General Security Deed to secure the money owed by Ayres Grove. The General Security Deed gave Abacus Finance the right to appoint a receiver and manager over Zoe Corporation's property in the event of default of the Facility Agreement; it is under this deed that Mr Jahani and Mr Campbell-Wilson have been appointed. 3. In 2017, AZ Mt Druitt took steps to sell the Mount Druitt property. Colliers International Pty Limited was engaged as real estate agents and gave an estimated selling price of between $25 million and $28 million. By September 2017, according to Mr Semaan, no expressions of interest had been received at a sufficient level to entice Mr Wolf and he to sell the property. On 25 September 2017, Mrs Semaan sent an email to Mr Wolf following a meeting with Mr and Mrs Semaan. Mrs Semaan proposed to buy the property for "Price $18 Million - $20 Million", with a delayed settlement of 12 months. Mr Wolf replied, "Have to discuss some of the concepts don't work for abacus". 4. On 28 September 2017, John McCann of Colliers sent Mr Wolf a link to an information memorandum, apparently from an interested party, and said Mr McCann would "go back at $20,000,000". Mr Wolf replied, "Mary will buy this at $20". Mr McCann replied "OK, WILL SEE WHAT I CAN DO. It's not a bad offer from her, if these guys want [won't?] pay it I would sell it to Mary". Mr Wolf replied, "Her terms are not suitable she wants too long to settle". What may be gleaned from these emails is that Mr and Mrs Semaan were interested in purchasing the property for up to $20 million but the delayed settlement was not attractive to Mr Wolf. 5. On 12 October 2017, Mr Wolf sent an email to Mr Semaan and his wife advising: John McCann will get $20m for Zoe He is edging ever closer to it. If you want to buy it I think we could do the following Sell you our ½ share Lend you the money for say two years at 7% Pay interest up front for year 1 which we will fund Secure our position with mortgages over zoe, Strethfield and Windsor road … You will then repay from sale of your current project or sell down of part of the portfolio Mr Semaan promptly replied, "We are definitely happy and greatful (sic) in moving forward to do the deal". 1. A week later, on 18 October 2017, Mr McCann forwarded a Letter of Offer for the property from Mackycorp Pty Limited, signed by Michael Hercus. Mackycorp offered $20 million for the property, subject to a number of conditions including a due diligence period. This appears to have been the potential offer referred to in Mr Wolf's email of 12 October 2017. The offer was forwarded to Mr and Mrs Semaan by John L'Estrange of Abacus Property Group, who added, "I have not had the meeting with the other possible buyer … yet. The other buyer is likely to want a long delayed settlement". It appears that there was more than one interested buyer. 2. The plaintiff purchased Abacus Funds' half share in the Mount Druitt property using the vendor finance proffered by Mr Wolf. In February 2018, the Facility Agreement was amended accordingly. Mr Semaan says that, whilst he considered that the price being offered by Mackycorp for the property was too low (which I note was the same price he and his wife had offered the week before), he was concerned that Abacus Funds may sell its interest in the property to Mackycorp. Rather than commence working with a new business partner, he agreed to Mr Wolf's proposal and abandoned his requirement for a delayed settlement. (Whether Mr Wolf would have been prepared to accept such a delayed settlement in any event is not known). Mr Semaan said that, whilst the terms of the vendor finance were ultimately not as attractive as originally suggested – with the interest rate set at 10% than 7% – he elected to proceed with the vendor finance nonetheless as he was concerned that Abacus Funds might sell its interest in the property to Mackycorp. 3. By August 2019, the Facility Agreement had fallen into default. In the meantime, Mr Semaan says that he and his wife met with Mr Hercus of Mackycorp, who apparently said that he had sent the Letter of Offer of 18 October 2017 as a favour and did not want to buy the property. This is denied by Mr Hercus and Mackycorp in separate Commercial List proceedings, in which Mr Hercus and Mackycorp say that the letter was a bona fide offer. In any event, in January 2020, Abacus Finance commenced proceedings in the Commercial List against AZ Mt Druitt and Mrs Semaan to enforce mortgages granted by each to secure performance of the Facility Agreement. Responses and cross-claims were filed, asserting that the guarantees and mortgages were induced by Mackycorp's 'sham offer' and should be set aside. A mediation took place in June 2020, which was unsuccessful. On 3 July 2020, the plaintiff's solicitors advised the solicitors for Abacus Finance and Abacus Funds that Zoe Corporation may soon commence proceedings itself in respect of the matters raised in the cross-claims. 4. On 7 July 2020, Abacus Finance advised the plaintiff that it wished to appoint a receiver and manager to Zoe Corporation in exercise of its right under the General Security Deed, and did so. On 8 July 2020, Mr Campbell-Wilson telephoned Mr Semaan and advised of his appointment. Abacus Finance told the receivers that some $16 million was then owed under the Facility Agreement and the only material asset of Zoe Corporation was its interest in the Mount Druitt property. The next day, on 9 July 2020, Zoe Corporation, Ayres Grove and Mr Semaan commenced proceedings in the Commercial List seeking a declaration that the Facility Agreement was voidable. The receivers immediately enquired of the plaintiffs' solicitor why it was that the proceedings had been commenced without the consent of the receivers. The receivers also requested the books and records of Zoe Corporation. On 13 July 2020, Zoe Corporation discontinued the Commercial List proceedings. 5. On 17 July 2020, the receivers and managers again requested the books and records of the company from Mr Semaan, and received no response. On 23 July 2020, the receivers and managers again requested the books and records from Mr Semaan and a completed report on company activities and property (ROCAP), but received no response. On 24 July 2020 the receivers and managers wrote to Mr Semaan, his solicitors and also to the managing agents for the Mount Druitt property, requesting trust accounts and records in respect of the management of the property. The receivers and managers expressed a concern that rent for the Mount Druitt property had been paid to a company related to Mr Semaan, EPS Constructions Pty Ltd, rather than to AZ Mt Druitt. Rents of $236,447.45 were said to have been misappropriated. No substantive response was provided to these letters. Rather, on 24 July 2020, the plaintiff's solicitors sent a draft originating process for these proceedings and advised that Mr Semaan was completing a ROCAP, which would be forwarded directly. 6. On 27 July 2020, the receivers and managers' solicitors wrote to the plaintiff's solicitors advising that they did not consider there was any basis for a grant of leave under section 237 of the Corporations Act. Whilst agreeing that section 237(2)(a) was satisfied, that is, it was probable that the company would not itself bring the proceedings, the receivers and managers contended that the plaintiff was not acting in good faith; that the proposed proceedings were hopeless; that it was not in the best interests of the company to bring proceedings; that there was no serious question to be tried; and enquired whether Mr Semaan would be providing the undertaking or indemnity which was generally considered necessary to be given before leave would be granted. On 4 August 2020, the receivers and managers wrote again to Mr Semaan, noting that they had not received the ROCAP, and requested its completion urgently. These proceedings 1. On 7 August 2020, these proceedings were commenced. The proposed proceedings for which leave is sought are Commercial List proceedings to be brought by Zoe Corporation, Ayres Grove and Mr Semaan against Abacus Finance, Abacus Funds Management, Mr McCann, Colliers International, Mr Hercus and Mackycorp. It is sought to be contended that: 1. Colliers and Mr McCann were the agents of Abacus Finance and Abacus Funds; 2. at the time of the 'sham offer', the property was worth $8 million (at the hearing of this application, the plaintiff's counsel frankly conceded that this allegation could not be maintained); and 3. "in fraud upon the Plaintiff", Mr Hercus and Mackycorp made a 'sham offer' of $20 million, inducing the plaintiffs to purchase Abacus Funds' interest in the property on vendor finance provided by Abacus Finance. 1. In support of the application for leave, two affidavits were read by Mr Semaan. Mr Semaan says that Zoe Corporation has a good claim to set aside the transaction involving Abacus Finance and Abacus Funds Management and the receivers and managers are inhibiting the conduct of such proceedings. That is the extent of the evidence relied upon by the plaintiff which might potentially satisfy section 237(2)(b) of the Corporations Act, although, of course the Court may have regard to all of the circumstances when considering whether the Court is satisfied that the applicant is acting in good faith. 2. On 17 August 2020, the receivers and managers' solicitors wrote to the plaintiff, inviting them to withdraw this application, but received no response. On 20 August 2020, the receivers and managers advised the Australian Securities and Investments Commission that no ROCAP had been completed by the director, as required under section 429(2)(b) of the Corporations Act. On 24 August 2020, the plaintiff's solicitors replied to the very detailed letter from the receivers and managers' solicitors of 27 July 2020, advising simply, We do not consider that the application is untenable. 1. On 3 September 2020, the receivers and managers wrote again (also in considerable detail), setting out why it was said that the application was unlikely to succeed, but advised that the receivers would abide by the decision of the Court so that, in the event that the Court granted leave to bring a derivative suit, the receivers and managers did not suggest that they would act otherwise in accordance with such an order. The receivers did, however, enquire whether an indemnity would be given by the plaintiff in respect of any costs orders which might be made against the company in any derivative suit. The receivers suggested that given the costs likely to be incurred by the defendants in the proposed Commercial List proceedings, the problems identified by the receivers with the merits of those proceedings, the difficulties which the receivers and managers had had in dealing with Mr Semaan – including obtaining the books and records of the company and having a ROCAP completed – the plaintiff should provide security by paying $300,000 into Court. Thus, if the derivative suit failed and costs order were made against Zoe Corporation, the receivers would not be put to further costs and expense in trying to extract that money from the plaintiff. The receivers and managers sought confirmation that the indemnity would be provided by 4 September 2020. The receivers and managers also noted that no usual undertaking as to damages had been proffered in respect of the injunction sought against the receivers and managers. 2. On 7 September 2020, the plaintiff's solicitors proferred the usual undertaking as to damages in respect of the injunctive relief sought. In respect of the request for an indemnity, the plaintiff's solicitor advised: In the particular circumstances of this case, we do not consider that indemnity will be required and we decline to provide such. 1. The receivers and managers' solicitors made enquiries of the proposed defendants to the derivative suit as to their estimated costs of defending such a claim. The solicitors for Colliers International and Mr McCann, Colin Biggers & Paisley, provided an estimate of $50,000 plus GST, assuming a three-day trial. The solicitors for Mackycorp and Mr Hercus, Mills Oakley, gave an estimate of $50,000 to $60,000 plus GST. The receivers and managers' solicitor, Pinsent Masons, gave an estimate on a conservative basis of $50,000 to $60,000. Thus, the overall costs exposure of Zoe Corporation – if leave is granted and the proceeding is unsuccessful – is $150,000 to $180,000. On 7 September 2020, the receivers' solicitor, William Ryan, affirmed an affidavit setting out the estimated costs of the derivative suit, noting the plaintiff's refusal to provide an indemnity and noting that the receivers and managers still had not received a completed ROCAP, nor the books and records of Zoe Corporation. 2. The plaintiff has since sought an extension of time from the receivers and managers to complete a ROCAP. On 17 September 2020, the receivers and managers gave an extension until 28 September 2020. I note, however, that this is still long after the ROCAP should have been completed by the plaintiff. Submissions 1. The plaintiff submitted that the only question that arose for serious determination was whether it was in the best interests of Zoe Corporation that Mr Semaan be granted leave, all other criteria being relevantly met. It was said to be significant that no steps were taken to enforce Abacus Finance's rights against Zoe Corporation until there was a threat of the company commencing litigation. The plaintiff submitted that the derivative suit will have the result of undoing a transaction which, if entered into in the circumstances alleged by Mr Semaan, should be undone. It imposed a substantial burden on the company in circumstances where, if the evidence of Mr and Mrs Semaan was accepted, an improper arrangement was likely to be "unpicked". The other proposed plaintiffs in the derivative suit could name Zoe Corporation as a defendant in those proceedings but it was submitted that there was a serious limitation on their capacity to obtain orders undoing transactions directly affecting Zoe Corporation, particularly over the objection of the receivers and managers, who were said to be unlikely or unwilling to join with Mr Semaan in pursuing that course notwithstanding that such a course would be of great benefit to Zoe Corporation. As to the wider restraint sought against the receivers and managers, the plaintiff submitted that it was appropriate to restrain them from exercising their powers "which may tend to frustrate litigation which is imminent". 2. In respect of the application for leave to bring a derivative action, the receivers submitted that, subject to the provision of an appropriate indemnity of substance supported by security, the receivers would abide by any decision of the Court and did not otherwise consent to, or oppose, the leave sought. The receivers did, however, express concern that, if leave to bring a derivative proceeding was granted and those proceedings were unsuccessful, Zoe Corporation would be exposed to the risk of significant adverse costs orders. This was not a case that was so assured of success that there might be some reason not to require that an indemnity be provided. To the contrary, the case as pleaded was said to have a number of difficulties including serious allegations of fraud which were unparticularised. The receivers submitted that the proceedings which Mr Semaan proposed to cause Zoe Corporation to bring were hopeless and based on a misguided attempt to extricate him and his related entities from a parlous financial situation of their own making. It was said that Mr Semaan had yet to identify any cogent basis upon which the claims sought to be advanced were even arguable and his silence on the point was said to be telling. 3. Further, no benefit to Zoe Corporation was said to have been identified by the derivative suit. In circumstances where Zoe Corporation was at the very least arguably insolvent, any benefit must axiomatically be any benefit to its creditors: Charlton v Baber (2003) 47 ACSR 31. It was submitted that it was not clear how bringing a difficult case against parties, at least some of whom were creditors of Zoe Corporation, could be said to be in their, or Zoe Corporation's, interests. Nor did it appear that there was a serious question to be tried: Ragless v IPA Holdings Pty Ltd (in liq) (2008) 65 ACSR 700. The wider injunction against the receivers was opposed. Sections 236 and 237 1. Section 236 of the Corporations Act permits a person to bring proceedings on behalf of a company if the person is a member of the company and the proceedings are brought with the leave of the Court granted under section 237. Section 237(2) of the Corporations Act provides that the Court must grant leave if it is satisfied: (a) it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and (b) the applicant is acting in good faith; and (c) it is in the best interests of the company that the applicant be granted leave; and (d) if the applicant is applying for leave to bring proceedings—there is a serious question to be tried; and (e) either: (i) at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or (ii) it is appropriate to grant leave even though subparagraph (i) is not satisfied. 1. It will be immediately noted that each of the five requirements of section 237(2) must be satisfied before the Court is obliged to grant leave. The onus of proving each of the criteria falls on the plaintiff. According to the Explanatory Memorandum to the Corporate Law Economic Reform Program Bill 1998 (CLERP Bill) which proposed this section, the five criteria in section 237(2) strike a balance between the need to provide an avenue for redress and the need to prevent actions proceeding which have little likelihood of success. 2. In this case, the first and fifth requirements are satisfied. In particular, the receivers and managers agree that, absent a grant of leave, Zoe Corporation will not itself bring the proposed proceedings. 3. The second requirement is that the applicant is acting in good faith. As Ball J explained in Re Gladstone Pacific Nickel Limited (2011) 86 ACSR 432; [2011] NSWSC 1235 at [58]: The requirement that the applicant be acting in good faith has at least two elements. One is that the applicant must honestly believe that the company has a good claim with reasonable prospects of success. The other is that the claim must not be brought for some collateral purpose as would amount to an abuse of process: Swansson [2002] NSWSC 583; (2002) 42 ACSR 313 at [36]. See also Maher [2005] NSWSC 859 at [29]; Gerard Cassegrain & Co Pty Ltd v Cassegrain [2010] NSWSC 91 at [110]-[111]; Fitzpatrick v Cheal [2010] NSWSC 717 at [40]. In my opinion, the applicant must also honestly believe that it is in the best interests of the company that the action be brought. 1. In South Johnstone Mill Ltd v Dennis and Scales (2007) 163 FCR 343; [2007] FCA 1448, Middleton J observed that the fact that the applicant is willing, as a condition of leave, to indemnify the company for costs and any adverse costs order may demonstrate good faith: at [69]. At the conclusion of the plaintiff's submissions, I enquired whether the plaintiff was prepared to give an indemnity, as had been sought by the receivers and managers in correspondence. After taking an adjournment to get instructions, the plaintiff's counsel advised that an indemnity would be forthcoming with the probable mechanism to be by way of a bank guarantee. There was no suggestion as to what the amount of that indemnity would be. There was obviously no documentation before the Court as to what the terms of the bank guarantee might be. There was no evidence before the Court as to the financial wherewithal of the plaintiff to provide the bank guarantee or, for that matter, to satisfy the usual undertaking as to damages proffered in respect of the injunction sought against the receivers, should it be called upon. 2. I have already set out the entirety of the evidence led by the plaintiff on the criteria of good faith, at [14]. It is hardly definitive. Leave is sought in the context of debt recovery proceedings where the plaintiff is a guarantor and also where the receivers have suggested that rent payable to Zoe Corporation has been misappropriated by payment to a company related to Mr Semaan. On one view of the matter, the proposed derivative suit is not brought so much to advance the interests of Zoe Corporation but to protect the interests of the plaintiff. The plaintiff's evidence as to good faith is slight and does not address the possibility that the derivative suit may be brought for collateral purposes. 3. The third requirement is that it is in the best interests of the company that the applicant be granted leave. As the Court of Appeal of the Supreme Court of Western Australia said in Blakeney v Blakeney (2016) 113 ACSR 398; [2016] WASCA 76 at [52]: (emphasis that of the Court of Appeal) Section 237(2)(c) … requires more than satisfaction that the grant of leave may be, appears to be or is likely to be in the interests of the company. Rather, the court must be satisfied that it is in the best interests of the company for leave to be granted: Swansson [55]—[56]; Chahwan v Euphoric Pty Ltd (t/as Clay & Michel) [2008] NSWCA 52; (2008) 245 ALR 780 [85]. 1. In Re Gladstone Pacific Nickel, Ball J described the requirements of this element at [57]: The requirement that the court be satisfied that it is in the best interests of the company that the applicant be granted leave raises two questions. One is whether it is in the best interests of the company that the action be brought. The other is whether it is in the best interests of the company that it be brought by the applicant. The court must consider the interests of the company as a whole. … In considering what is in the best interests of the company, it is necessary to consider the prospects of success of the action, the likely costs and likely recovery if the action is successful and likely consequences if it is not. One relevant matter in considering these issues is the nature of any indemnity the applicant has offered to the company if the action is brought and the likelihood that the company will recover under that indemnity. It is also necessary to consider the resources the company will be required to devote to the action and the resources it has available, together with the effect that the action may have on other aspects of its business. Finally, it is necessary to consider whether some other remedy is available to the applicant so as to make the proposed action unnecessary from its point of view: see Swansson [2002] NSWSC 583; (2002) 42 ACSR 313 at [56]ff. 1. The importance of an indemnity in this context was also emphasised by the Court of Appeal in Blakeney v Blakeney at [65] to [68]. See likewise In the matter of Sundara Pty Limited [2015] NSWSC 1694 per Black J at [72]. The existence of an adequate and viable indemnity becomes critical in circumstances where the receiver has pointed to some apparent problems with the proposed action. If the derivative suit fails, then that may not much matter for Zoe Corporation if it is indemnified, in real terms, from the consequences of any such loss, in particular, by costs orders being made against the company in favour of the proposed defendants. As already mentioned, historically the plaintiff has declined to provide an indemnity but, when pressed at the hearing, proffered a bank guarantee in unknown amount. 2. A further question arises as to whether it is in the interests of the company for the derivative suit to be brought by Mr Semaan. In circumstances where – at the time of the hearing of this application at least – Mr Semaan has yet to hand over the books and records of Zoe Corporation or submit a ROCAP despite several requests from the receivers – it may be thought that his suitability to prosecute such a claim is subject to question. Nor did the plaintiff's evidence address the prospects of success of the proposed derivative suit, the likely costs and likely recovery if the action was successful or the likely consequences if it was not. There was no evidence as to the effect which such an action may have upon Zoe Corporation, including its resources and the impact of such an action on any other aspect of its business or whether some other remedy was available which may suit equally well. 3. The fourth criteria is whether there is a serious question to be tried in the derivative suit. Counsel for the receivers pointed to aspects of the proposed proceedings said to have difficulty: how is it said that Colliers and Mr McCann were agents of Abacus Finance or Abacus Funds when the agency agreement was with AZ Mt Druitt; how is it said that the purchase price of $20 million in the 'sham offer' far exceeded the value of the property when Mr and Mrs Semaan were prepared to pay the same price a month earlier; how is it said that Zoe Corporation was induced by the 'sham offer' when Mr Semaan accepted Mr Wolf's proposal to purchase Abacus Funds' half interest in the Mount Druitt property before the 'sham offer' was made. Each of these points was, with respect, fairly made. 4. For these reasons, I am not satisfied that the plaintiff has established the criteria in section 237(2)(b) to (d), particularly having regard to the prospects of success of the proposed proceedings and the uncertainty as to how the company's interests will be protected if those proceedings fail. Leave is refused. 5. In respect of the application to restrain the receivers and managers, it was unclear to me why I would restrain the receivers and managers, even if I were otherwise minded to grant leave. I can do no better than repeat paragraph 19 of the defendants' submissions: The powers the subject of any concern are not identified, the steps which it is envisaged the Receivers might take to frustrate litigation are not identified, and nor, indeed, is that litigation identified. One apprehends that this is directed at seeking to restrain the Receivers from taking steps to prevent the company bringing the proceedings in respect of which leave is sought (if such leave were granted). But there is no basis for that concern. Plainly, if leave is granted, the Receivers will abide by that order. Once that is accepted, there is not the basis for this relief to be granted. That application should be dismissed. 1. For these reasons I make the following orders and directions: Grant leave to the plaintiff to amend the Originating Process to join as third defendant, Zoe Corporation Pty Limited (receivers and managers appointed). Dismiss the Amended Originating Process dated 25 September 2020. Order the plaintiff to pay the defendants' costs of these proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 October 2020