CleanFin Pty Ltd v Forest Carbon Methodology Pty Ltd (No 2)

This matter sits inside a broader corporate dispute being run on behalf of Forest Carbon Methodology Pty Ltd, or FCM, by CleanFin Pty Ltd. FCM alleged that its former directors, James Schultz and Lewis Tyndall, diverted a business opportunity that should have been available to FCM to Terra Carbon Pty Ltd and Geo Carbon Services Pty Ltd. FCM sought an account of profits, alleging breaches of fiduciary duty and unauthorised profit-making connected with the directors' positions.

The decision reported as CleanFin Pty Ltd v Forest Carbon Methodology Pty Ltd (No 2) [2025] FCA 163 is not the final trial judgment. It is a procedural decision dealing with how the case should be framed and managed before trial. That included whether more parties could be added, whether the pleading could be amended, whether more discovery should be ordered, and what further security for costs should be provided.

The commercial background matters. The Court recorded that material produced during a referee process indicated that between 2014 and 2020 more than $10.5 million had been paid in fully franked dividends by Terra Carbon and its holding company. Later dividend statements indicated that substantial dividends were received by Bundaleer Nominees Pty Ltd and by the Tyndall Family Superannuation Fund. That later information became the basis for trying to widen the case beyond the original defendants.

The Court identified three main sets of interlocutory issues. First, in the derivative proceeding, CleanFin sought leave under sections 237 and 241 of the Corporations Act 2001 to bring proceedings on behalf of FCM against three additional parties: Bundaleer Nominees Pty Ltd, Shirley Tyndall in her capacity as trustee of the Tyndall Family Superannuation Fund, and Mirriyindi Super Pty Ltd.

Second, in the substantive proceeding, FCM sought orders joining those parties as the fifth, sixth and seventh defendants, and sought leave to file a further amended originating process and a further amended statement of claim. The proposed amendments included allegations that Bundaleer should account in equity either as the corporate alter ego of Mr Schultz or as a knowing recipient, and that Mr Tyndall, Shirley Tyndall as trustee, and Mirriyindi should account in equity in relation to dividends received by the Tyndall Fund.

Third, FCM sought additional discovery and further and better discovery. At the same time, the existing defendants sought further security for costs. So the Court was not deciding the ultimate merits of the fiduciary duty allegations. It was deciding whether the case should be widened and what procedural steps were necessary to get it ready for trial.

The trial was listed to commence on 2 June 2025. That timing mattered because the Court had to balance the need to decide the real controversy against the risk of unfair prejudice, delay and disruption to the trial timetable.

The key legal issue was whether the Court should allow the proceedings to expand so the real controversy could be determined justly, quickly, inexpensively and efficiently. The judgment refers to the broad power to permit amendments and the need to apply that power consistently with section 37M of the Federal Court of Australia Act 1976. The Court also referred to established amendment principles, including whether the proposed amendments were futile, whether they had reasonable prospects, whether delay was adequately explained, and whether any prejudice could be managed.

The Court accepted FCM's explanation for the timing of the amendment application. The proposed amendments were said to have been prompted by later information emerging through the referee process, especially detailed dividend statements produced on 13 September 2024. The Court noted that earlier material had suggested only a dividend of $1 had been paid to the Tyndall Fund, whereas the later statements indicated substantial dividends had in fact been received by the Tyndall Fund and by Bundaleer. The Court did not regard the delay between that disclosure and the amendment application as lengthy or as counting against leave.

The Court also rejected the argument that the proposed claims were necessarily futile. In relation to Bundaleer, FCM relied on an alter ego theory and, alternatively, a knowing recipient theory. The Court held there was a sufficient basis to conclude that the proposed amendment was not obviously futile. The Court did not finally determine the merits of those theories. It only decided that they were arguable enough to be pleaded and tested later.

For the claims involving the Tyndall Fund and Mirriyindi, the Court indicated that the pleading needed to state the basis of liability more clearly. FCM had used what it described as a short-form articulation. The Court allowed the amendment process to proceed but required additional particulars for certain allegations. That is an important procedural point. The Court was willing to let the case move forward, but not on an unclear pleading.

On 28 February 2025, in the derivative proceeding, the Court granted CleanFin leave to bring proceedings on behalf of FCM against Bundaleer Nominees Pty Ltd, Shirley Tyndall in her capacity as trustee of the Tyndall Family Superannuation Fund, and Mirriyindi Super Pty Ltd. The leave was granted to make claims in the form, or substantially in the form, of the proposed further amended statement of claim, subject to the exceptions identified in the substantive proceeding.

Also on 28 February 2025, in the substantive proceeding, the Court ordered that Bundaleer, Shirley Tyndall as trustee, and Mirriyindi be joined as the fifth, sixth and seventh defendants. The Court granted leave to file and serve a further amended originating process and granted leave to file a further amended statement of claim, but not without limits. The leave did not extend to proposed paragraph 71. The Court also required additional particulars for the pleas concerning the basis on which Bundaleer was said to be the corporate alter ego of Mr Schultz or otherwise attributed with his knowledge, and for the pleas concerning the basis on which Mr Tyndall, Shirley Tyndall as trustee, and Mirriyindi were said to be liable to account in equity for profits received as dividends by the Tyndall Family Superannuation Fund.

On 6 March 2025, the Court made discovery orders. The first to fourth defendants were ordered to make further and better discovery by performing specified keyword and custodian searches, reviewing the resulting documents, and making discovery of relevant documents. The Court also ordered discovery of additional categories of documents, with one category narrowed so that it was limited to records created or maintained at a senior management or board level. The first and second defendants were also ordered to make discovery of categories identified in a schedule to affidavit material.

On security for costs, the Court ordered the plaintiff to provide security for the first to fourth defendants' costs in the amounts and form of the plaintiff's proposal dated 10 December 2024, as explained in affidavit material. The catchwords and orders indicate that this involved an after-the-event insurance policy with an anti-avoidance endorsement. The Court also ordered that the $400,000 already paid into court for the first and second defendants' costs remain in court, and that the $250,000 already paid into court for the third defendant's costs also remain in court. If the plaintiff failed to comply with the further security order, the proceedings would be stayed.

This case is best read as a procedural warning in a corporate opportunity dispute. It shows that the Court may allow a case to widen if later-produced financial records suggest profits moved beyond the original operating company and directors. If your business uses multiple entities, nominee companies, family structures or superannuation vehicles, those structures may become relevant if someone alleges that profits were derived from a diverted opportunity or another breach of duty.

It also shows the importance of document trails. Here, the amendment application was driven by dividend statements produced during a referee process. That means records created for accounting, tax or internal distribution purposes can later become central evidence in a fiduciary duty case. Businesses should preserve board records, dividend records, trustee records, and communications showing who controlled each entity and why profits were distributed in a particular way.

The decision is also a reminder that litigation risk is not limited to the final hearing. Discovery obligations can expand. Security for costs can tie up cash or require insurance-backed arrangements. A case can be stayed if ordered security is not provided. Those issues affect settlement pressure, funding, and the practical ability to continue the proceeding.

Finally, this is not an intellectual property case. The judgment is about corporate governance, fiduciary duties, alleged diversion of opportunity, equitable accounting for profits, joinder, discovery and security for costs. Businesses should read it through that lens.

The judgment is dated 6 March 2025 and records orders made on both 28 February 2025 and 6 March 2025. The reasons explain that the trial in the substantive proceeding was listed to commence on 2 June 2025. The Court made some orders before publishing full reasons because the trial date was three months away and the joinder and amendment issues needed to be resolved promptly.

Because this was an interlocutory decision, it should not be treated as the final word on liability or final relief. It records what claims and parties were allowed into the case, what discovery had to occur, and what security for costs had to be provided before the matter moved toward trial.