When a business partner invests $100,000 for a 49% stake in a company and then watches the majority shareholders extract funds through loans, payments and wages — what are the legal options?
That was the situation facing Dale May, a motor mechanic who had purchased a 49% shareholding in Auto Trans Tech Qld Pty Ltd, a business specialising in automatic transmission repairs and servicing. EAGLEGATE recently acted for Mr May in the Supreme Court of Queensland, where Justice Smith granted leave to bring a derivative action on behalf of the company and access to the company’s financial records.
The judgment is reported as May v McCurdy & Anor [2026] QSC 40.
The Background
Mr May invested $100,000 for a 49% stake in the company in mid-2023. The first defendant, Mr Christopher McCurdy, oversaw management of the business. The second defendant, Ms Nicole McCurdy, handled bookkeeping and administration. Mr May was employed by the company as its manager.
In 2025, Mr May became concerned that funds were being removed from the business. His concerns included: supplier accounts being closed, loans being recorded, payments to entities controlled by Mr McCurdy, wages, removed assets, and unexplained ATO debts. On 2 December 2025, his employment with the company was terminated.
Mr May posed questions common to minority shareholders — has the company been wronged? It was not expected that the majority shareholders who controlled the company would take action to recover what had been taken.
The Derivative Action — Section 237
The Corporations Act 2001 (Cth) provides a mechanism for this situation. Section 237 allows a shareholder to apply to the Court for leave to bring proceedings in the company’s name — a derivative action — where the company itself will not act.
The Court must grant leave if it is satisfied that:
- It is probable that the company will not itself bring the proceedings
- The applicant is acting in good faith
- It is in the best interests of the company that leave be granted
- There is a serious question to be tried
Justice Smith was satisfied that each of those criteria was met. The alleged conduct — diversion of company funds to entities controlled by the majority shareholders, fictitious wages, and removal of assets — gave rise to a serious question to be tried on causes of action including breaches of the directors’ duties under sections 180, 181, 182 and 183 of the Corporations Act and breach of fiduciary duty.
The Court also found the good faith requirement was satisfied and that bringing the proceedings was in the best interests of the company — not just Mr May personally.
Leave was granted. The company was added as second plaintiff. Mr May was required to provide an indemnity of $50,000 towards the company’s costs of the proceedings.
Access to the Company’s Books — Section 247A
The Court also granted leave under section 247A of the Corporations Act for Mr May and any expert he engaged to inspect the company’s books of account. This is a critical step in any minority shareholder dispute where financial misconduct is suspected — access to the financial records is often what establishes the full extent of what has occurred.
What This Case Illustrates
Several aspects of this matter are relevant for minority shareholders more broadly.
Act before records disappear. Where a minority shareholder suspects funds are being misused, time is critical. Financial records can be altered, assets can be dissipated, and company structures can be changed. The sooner legal advice is sought and access to books is obtained, the stronger the evidentiary foundation for any claim.
The company is also a victim. A derivative action is not just about recovering the minority shareholder’s loss — it is about the company recovering what was taken from it. That distinction matters legally and practically. The damages available in a properly conducted derivative action can be significantly greater than damages available to the minority shareholder in their personal capacity.
The majority’s control of the company is not the end of the story. Where the majority shareholder also controls the board, the company will not bring proceedings against itself. The derivative action mechanism exists precisely for this situation — to allow a shareholder acting in good faith to put the company’s claim before the Court.
A serious question to be tried is a lower threshold than proof. The Court does not at this stage determine whether the alleged conduct occurred. It assesses whether, if the allegations are proved, they would give rise to a cause of action — and whether there is a genuine factual foundation for the claim. That is a threshold the evidence in this matter met.
What to Do if You Are in a Similar Position
If you are a minority shareholder and you suspect that directors or majority shareholders are misusing company funds or assets, seek legal advice promptly. The key steps are:
- Preserve any documents and records you currently have access to
- Do not take unilateral action — including withdrawing funds or transferring assets — without legal advice
- Seek access to company books at the earliest opportunity
- Understand whether a derivative action, an oppression claim under section 232, or both may be available
EAGLEGATE acts for majority and minority shareholders in disputes across Brisbane and Queensland. For advice on your specific situation, book a confidential consultation.
The judgment in May v McCurdy & Anor [2026] QSC 40 is available on AustLII.
This article is general information only and does not constitute legal advice. For advice on your specific situation, speak with a lawyer.