In the matter of Pacific Springs Pty Limited [2020] NSWSC 1240

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Pacific Springs Pty Limited [2020] NSWSC 1240 Hearing dates: 14, 15, 16, 17 July 2020 Date of orders: 11 September 2020 Decision date: 11 September 2020 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Refuse application under s 175 Corporations Act to correct share register. Order under s 1322(4) Corporations Act that appointment and acts of director and secretary not invalid. Catchwords: CORPORATIONS – parents lend $800,000 to son to buy ice cream business in Australia – parents live overseas – company formed – parents are shareholders and son is director – son runs business – son repays half of loan – son allotted 1,800 shares and becomes majority shareholder – son repays loan – son dies leaving shares to de facto husband – parents seek to correct register 14 years after shares allotted. SHARE ISSUE – power to allot shares – principles at [115]-[126] – allotment with knowledge and consent of parents. DIRECTORS – power to appoint director – whether director had power to appoint replacement director by a Will – cannot 'hand down' a directorship – power to appoint director ceased on death, at [154]-[159] – s201F Corporations Act 2001 at [170]-[171]. PROBATE – whether executor can exercise power to take appointment as director prior to grant of probate, considering Lockrey v Barnard James Fussell [2019] NSWCA 299 at [163]-[167] – appointment ineffective in any event – section 44 Probate and Administration Act does not cure invalid acts. CORPORATIONS – s 1322 Corporations Act – "just and equitable" at [176] – "substantial injustice" at [178]. EVIDENCE – events 16 to 20 years ago – reliance on what deceased said at [7] – forgery – onus and standard of proof at [8]-[9] – comparison of handwriting at [82] – Jones v Dunkel inference from failure to produce documents at [138] EQUITY – laches at [181]-[194] – estoppel at [195]-[199] – plaintiffs' silence did not amount to a representation as no duty to inform the defacto husband Legislation Cited: Companies Act 1961 (NSW), reg 68 of Table A in the Fourth Schedule Corporations Act 2001 (Cth), ss 175, 178A, 178D, 201F, 254X, 1322, 1322(4), 1322(4)(a), 1322(6), 1322(6)(a)(iii), 1322(6)(c) Evidence (Audio and Audio Visual Links) Act 1998 (NSW), s 22C(4) Evidence Act 1995 (NSW), s 140(2) Probate and Administration Act 1898 (NSW), ss 44, 61 Cases Cited: Alexiou v Alexiou [2020] NSWSC 748 Amaya v Everest Property Holdings Pty Ltd; Firmstone v Everest Property Holdings Pty Ltd; Sarkar and Islam v Everest Property Holdings Pty Ltd (2010) 15 BPR 28,695; [2010] NSWCA 315 Ansett v Butler Air Transport Ltd (No 1) (1957) 75 WN (NSW) 299 Ascot Investments Pty Ltd v Harper [1981] HCA 1; (1981) 148 CLR 337 Ashburton Oil NL v Alpha Minerals NL (1971) 45 ALJR 162; (1971) 123 CLR 614 Beck v LW Furniture Consolidated (Aust) Pty Ltd [2011] NSWSC 235 Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) and (No 10) (2008) 39 WAR 1; [2008] WASC 239; [2009] WASC 107 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Boardman v Phipps [1967] 2 AC 46; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Byers v Overton Investments Pty Ltd (2001) 109 FCR 554; [2001] FCA 760 Car Buyers Australia Pty Limited v Australian Securities and Investments Commission [2020] FCA 599 Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299; (2019) 19 BPR 39,853 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 Chung-Yi Pty Ltd v Chih-Yang Chang (No 2) (2018) 128 ACSR 585; [2018] NSWSC 1112 Clementi v Rossi [2019] VSC 725 Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12 Crawley v Short (2009) 262 ALR 654; [2009] NSWCA 410 DAC Finance (NSW/QLD) Pty Limited [2020] NSWSC 182 Damjanovic v York Agencies Pty Limited [2003] NSWCA 222 Darrington v Caldbeck (1990) 20 NSWLR 212 Darvall v North Sydney Brick & Tile Co Ltd (1989) 15 ACLR 230; (1989) 16 NSWLR 260 Demagogue Pty Ltd v Ramensky (1992) 110 ALR 608; (1992) 39 FCR 31 Duke Group Ltd (In liq) v Alamain Investments Ltd (2003) 232 LSJS 58; [2003] SASC 415 Ex parte Callan; Re Smith [1968] 1 NSWR 443 Finance & Guarantee Company Pty Ltd v Auswild [2019] VSC 664 Fysh v Page [1956] HCA 13; (1956) 96 CLR 233 Gerace v Auzhair Supplies Pty Ltd (in liq) (2014) 87 NSWLR 435; [2014] NSWCA 181 Gillespie v Gillespie [2013] QCA 099; [2013] 2 Qd R 440 Gofur v Bangladesh Islamic Centre of NSW (BIC) [2020] NSWSC 652 Grant v John Grant & Sons Pty Ltd (1950) 24 ALJR 374; (1950) 82 CLR 1 Grundt v Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641 Hancock v Rinehart [2015] NSWSC 646; (2015) 106 ACSR 207 Harlowe's Nominees Pty Ltd v Woodside (Lakes Entrance) Oil Co NL (1968) 42 ALJR 123; (1968) 121 CLR 483 Hewitt v Gardner (2009) 3 ASTLR 407; [2009] NSWSC 705 Hindle v John Cotton Ltd (1919) 56 Sc LR 625 HNA Irish Nominees Ltd v Kinghorn (No 2) (2012) 290 ALR 372; [2012] FCA 228 Howard Smith Ltd v Ampol Ltd [1974] 1 NSWLR 68; [1974] AC 821 Integrated Medical Technologies Ltd v Macel Nominees Pty Ltd (1988) 6 ACLC 426; (1988) 13 ACLR 110 Jeans v Cleary [2006] NSWSC 647 Jones v Dunkel [1959] HCA; (1959) 101 CLR 298 8 Keech v Sandford (1726) Sel Cas Ch 61 Kirwan v Cresvale Far East Ltd (in liq) (2002) 44 ACSR 21; [2002] NSWCA 395 Kokotovich Constructions Pty Ltd v Wallington [1995] NSWSC 54; (1995) 17 ACSR 478 Lamshed v Lamshed (1963) 109 CLR 440; [1964] ALR 321 Lazarus v Director of Public Prosecutions (NSW) [2015] NSWSC 426 Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 Mancini v Mancini (1999) 17 ACLC 1570; [1999] NSWSC 799 Manthey Redmond (Aust) Pty Ltd (In Liq) v Manthey (2017) 121 ACSR 389; [2017] QSC 145 Marshall v DG Sundin & Co Pty Ltd (1989) 16 NSWLR 463 Mavris v Level 12 Property Holdings Pty Limited [2018] NSWSC 957 Mills v Mills (1938) 11 ALJR 527; (1938) 60 CLR 150 Neat Holdings Pty Limited v Karajan Holdings Pty Limited [1992] HCA 66; (1992) 110 ALR 449; (1992) 67 ALJR 170 Ngurli Ltd v McCann (1953) 27 ALJR 349; (1953) 90 CLR 425 Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 Permanent Trustee Co Limited v Bernera Holdings Pty Limited [2004] NSWSC 56; (2004) 11 BPR 21,505 Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14 R v Doney (2001) 126 A Crim R 271; [2001] NSWCCA 463 Re A Bliss Clinic Pty Limited v Goodwin (No 2) [2020] FCA 869 Re Bleriot Manufacturing Aircraft Co (1916) 32 TLR 253 Re Centura Global Holdings Pty Ltd (2016) 111 ACSR 185; [2016] NSWSC 62 Re Compaction Systems Pty Limited & the Companies Act (1976) 2 ACLR 135; [1976] 2 NSWLR 477 Re ICandy Interactive Limited (2018) 125 ACSR 369; [2018] FCA 533 Re Ledir Enterprises Pty Limited (2013) 96 ACSR 1; [2013] NSWSC 1332 Re Motasea Pty Ltd (2014) 97 ACSR 589; [2014] NSWSC 69 Re Novonix Limited (2019) 141 ACSR 636; [2019] FCA 2198 Re Queensland Bauxite Limited (2018) 364 ALR 661; [2018] FCA 2113 Re Sutherland and Arnautovic [2014] NSWSC 821 Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 Royal British Bank v Turquand (1856) 6 E&B 327 Saad v Doumeny Holdings Pty Limited [2005] NSWSC 893 Savage v Lunn [1998] NSWCA 203 (unreported) Savage v Lunn [1998] NSWCA 204 Scallan v Scallan [2001] NSWSC 1129 Sidhu v Van Dyke (2014) 251 CLR 505 Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 Super John Pty Limited v Futuris Rural Pty Limited (1999) 32 ACSR 398; [1999] NSWSC 627 Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1985] 2 All ER 947; [1986] AC 80 Talga Ltd v MBC International Limited [1976] HCA 22; (1976) 133 CLR 622 Tasoulas v Tasoulas [2018] NSWSC 861 TC Newman (Qld) Pty Ltd v DHA Rural (Qld) Pty Ltd (1987) 12 ACLR 257; [1988] 1 Qd R 308 The Chinese Cultural Club Limited (2004) 49 ACSR 568; [2004] NSWSC 432 Thomas v MacKay Investments Pty Limited (1996) 22 ACSR 294 Watson v Foxman (1995) 49 NSWLR 315 Way v A G Way & Co Pty Ltd [1959] ALR 855; [1959] VR 370 Weinstock v Beck (2013) 251 CLR 396; [2013] HCA 14 Whitehouse v Carlton Hotel Pty Ltd [1987] HCA 11; (1987) 162 CLR 285 Winthrop Investments Pty Ltd v Winns Ltd [1975] 2 NSWLR 666 Wood v Inglis (2008) 68 ACSR 420; [2008] NSWSC 1147 Worcester Corsetry Ltd v Witting [1936] Ch 640 Texts Cited: Dr I. C. F. Spry, Principles of Equitable Remedies (9th ed, 2014) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) K. R. Handley, Estoppel by Conduct and Election, (2nd ed, 2016, London, Sweet & Maxwell) Wigmore on Evidence (3rd ed., 1940), vol. 2 Category: Principal judgment Parties: Gani Mualim (First Plaintiff) Jorida Mualim (Second Plaintiff)