Lotus Property Fund No 8 [2020] NSWSC 1349

“Let me get the company its share of the money!”

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~$100m was paid following the sale of a site in Sydney.

The Co stood to receive some of the proceeds.

P - a former director of the Co - had the benefit of a “side deed” which might see a related entity of his take a benefit if the Co received a greater share of the proceeds.

It was contemplated that some of the sale proceeds would be distributed in a manner that concerned P.

P brought a derivative action - tried to “stand in the company’s shoes” - to bring a claim that the Co should take a greater share of the funds: [59]

It was uncontroversial that the Co was not going to bring the claim itself: [72]

The Court found the application was brought in good faith, with the P’s motive being to seek a proper distribution of funds for the benefit of the Co, or info that would aid that pursuit: [89], [92]

The “relatively low” threshold of a serious question to be tried was met: [94], [113]

The purpose of P bringing the proceedings - for the Co to take a greater share of funds, or get info that would enable that - was found to be in the Co’s best interests, despite uncertainties about prospects and recoverability: [130]

P was granted leave, notwithstanding the absence of notice: [132], [135]