AUSTRALIA Law and Practice Contributed by: Joachim Delaney and Ranjani Sundar, HFW
4. Overseas Parties in Fraud Claims 4.1 Joining Overseas Parties to Fraud Claims The courts have taken an expansive view in relation to fraud and misleading conduct/misrepresentation claims in Australia. Overseas parties may be joined to fraud claims in Australia where: • the representation or conduct, although originating overseas, is received in Australia ( Ramsey v Vogler [2000] NSWCA 260, [36]–[48]); • part of the conduct occurs in Australia and part outside ( Trade Practices Commission v Australian Meat Holdings Pty Ltd (1988) 83 ALR 299); • the conduct overseas nonetheless involves instructing an agent to act in Australia ( Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1); and • the conduct overseas has a technology element that is capable of being accessed in Australia ( Australian Competition & Consumer Commission v Hughes (t/a Crowded Planet) [2002] ATPR 41–863, 44, 792). Joinder of Parties Each state has different civil procedure legislation governing the joinder of parties, including foreign enti - ties or individuals. In NSW, Rule 6.24 of the UCPR provides the following. “(1) If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party; (2) Without limiting subrule (1), in proceedings for the possession of land, the court may order that a person (not being a party to the proceedings) who is in pos - session of the whole or any part of the land (whether in person or by a tenant) be added as a defendant.” Additionally, individuals can apply to the court to be joined as a plaintiff or defendant (UCPR r 6.27) depending on the circumstances.
company is unlikely to bring proceedings itself in rela - tion to the fraudulent conduct of the directors, and that there is a serious question to be tried (Corpora - tions Act 2001 (Cth) Section 237 (2); Swansson v RA Pratt Properties Pty Ltd (2002) 42 ACSR 313; [2002] NSWSC 583, recently discussed in Sunny Internation- al Hardware Group Pty Ltd, Re [2025] NSWSC 254 at [46]). The best interests of a company are determined by considering the type and nature of the company, such as where there is a closely held company, and where there would be a reasonable expectation of involvement in the management of the company. As to considerations in respect of whether there is a seri - ous question to be tried, the court may also consider the prospects of success of the action if leave is to be granted ( Pesec v Consolidated Builders Limited [2021] ACTCA 25, at [61]-[78]). Additionally, the court may consider whether a com - pany is well resourced, and the effect that the deriva - tive action will have on the company’s business, such as whether the action would cause the company to cease trading, or to divert resources from its ordinary operations. There is also a rebuttable presumption that granting leave to bring a derivative action is not in the company’s best interests, where the company has decided not to commence proceedings or has discontinued proceedings (Corporations Act 2001 (Cth) Section 237 (3)(b)). In considering whether to grant leave to sharehold - ers of a company to commence a statutory derivative action, a court will also consider whether the share - holders have ratified or approved the misconduct of the directors (Corporations Act 2001 (Cth) Section 239). Additionally, in some instances a statutory derivative action will not be available to shareholders, where the company is in liquidation ( Smart Company Pty Ltd (In Liquidation) v Clipsal Australia Pty Ltd (No 6) [2011] FCA 419).
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