In May v McCurdy & Anor [2026] QSC 40 upheld May's application for leave to commence a derivative action on behalf of a company that he held 49% of the shares in circumstances where he was dismissed after raising issues of alleged financial irregularities against the director and 51% shareholder.
May and McCurdy are motor mechanics. McCurdy operated Auto Trans-Tech QLD which employed May. In May 2023 an agreement was made for May to purchase 49% of ATTQ for $100k. In 2025 May became concerned that McCurdy was using the ATTQ for his own financial purposes. In December 2025 May's employment with ATTQ was terminated. May commenced proceedings against McCurdy seeking damages under ss 180-182 of the Corporations Act and for breach of fiduciary duty. Those claims were struck out but leave to replead was granted. May brought an application under s 237 to bring an action on behalf of ATTQ, and leave to inspect ATTQ's books.
His Honour considered sections 237 and 237 of the Corporations Act which deal with bringing derivative actions on behalf of a company, and identified the criteria of which the Court needs to be satisfied before making any orders, ie: (1) it is probable that the company will not itself bring the proceedings or properly take responsibility for them or for the steps in them; (2) the applicant is acting in good faith; (3) it is in the best interests of the company that the applicant be granted leave; (4) there is a serious question to be tried; and (5) at least 14 days before the making of the application the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying.
His Honour noted that criteria 1 was not in dispute, and criteria 5 was not pressed. The focus was therefore on criteria 2, 3, and 4. As to good faith, his Honour found May was acting in good faith even though there was personal animosity between the parties. The core intent was to recover company funds allegedly misappropriated. In considering whether it was in the best interests of ATTQ, his Honour held it was in ATTQ’s best interests to pursue the claim. ATTQ was essentially a "shell" with no other assets, and the proposed litigation represented the only viable path to recover significant sums (approx. $180,000) allegedly taken by McCurdy. Last, in considering if there was a serious question to be tried, his Honour undertook an analysis of the various claims and evidence, and ultimately found that May provided sufficient evidence of unauthorized transfers and "management fees" paid to McCurdy to suggest a triable case for breach of fiduciary duties.
Accordingly, His Honour exercised power under s 242 to grant leave to commence a derivative action and ordered both an indemnity and security in the amount of $50,000 - being an incomplete indemnity on both parties' cases.