In the matter of Crow Inn Pty Limited (No 2) [2020] NSWSC 1749

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Crow Inn Pty Limited (No 2) [2020] NSWSC 1749 Hearing dates: 25 August 2020 Date of orders: 7 December 2020 Decision date: 07 December 2020 Jurisdiction: Equity Before: Rees J Decision: Amend share register under s233 Corporations Act; wind up companies on just and equitable ground; stay orders for 14 days to permit share buy-out; appoint receiver to family trust. Catchwords: CORPORATIONS – OPPRESSION – principles at [217]-[224] – oppression of majority shareholder by minority shareholder – majority shareholder did not have control – minority shareholder with operational control excluded majority shareholder from management and obstructed efforts to remove capital on reasonable terms: at [247]-[248]. CORPORATIONS – Family engaged in hotel businesses – grandparents retire – grandparents fund land and construction of hotel in Wagga as gift to son and grandson – son is majority shareholder – grandson operates hotel, being his first hotel – son mentors and supervises grandson from Sydney – shareholders agreement – grandson to be general manager for 5 years in return for $1m and further 10% shares in operating company – grandson buys land to build hotel nearby without telling son – son issues buy-out notice – grandson rescinds shareholders agreement – CCTV feed relied on by son in Sydney is cut – sustained delay in implementing resolutions to sell land and business – grandson progresses own development over son's protest – bad behaviour – police called – grandson resigns and claims $1.6m wages – deadlock – irretrievable breakdown of relations. CORRECT SHARE REGISTER – s175 Corporations Act – principles at [257]-[258] – not applicable where shares transferred under contract later repudiated when part-performed. OPPRESSION – remedies – principles at [259]-[261] – buy-outs at [268]-[270] – grandson offers to buy shares in operating company but not landholding company – won't cure oppression – ample time to agree – won't order buy-out but will stay winding up order for 14 days to permit buy out – amend share register. CORPORATIONS – winding up on just and equitable grounds – s 461(1)(k), s 467(4) Corporations Act – deadlock – irretrievable breakdown of relationship in family companies – companies are solvent – whether able to co-operate in one company but not the other – liquidator appointed to both companies. LIQUIDATORS – choice of liquidator – principles at [290]-[292] – no evidence that plaintiffs' nominated liquidator lacked independence – cost advantages. RECEIVERS – ipso facto clause – trust constitution requires consent between deadlocked directors to appoint new trustee – interim receiver of assets of operating company appointed as receiver to assets of family trust. Legislation Cited: Australian Consumer Law, ss 18, 20 Corporations Act 2001 (Cth), 175, 232, 233, 461(1)(k), 467(4) Trustee Act 1925 (NSW), s 70 Uniform Civil Procedure Rules 2005 (NSW), r 7.12(2) Cases Cited: Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd (2008) 66 ACSR 325; [2008] VSCA 86 Alati v Kruger [1955] ALR 1047; (1955) 94 CLR 216 Ample Source International Ltd v Bonython Metals Group Pty Ltd (No 6) (2011) 285 ALR 488; [2011] FCA 1484 Asia Pacific Joint Mining Pty Limited v Allways Resources Holdings Pty Limited (2018) 125 ACSR 227; [2018] QCA 048 Ausino International Pty Ltd v Apex Sports Pty Ltd [2007] NSWSC 360 Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd (2016) 116 ACSR 566; [2016] NSWCA 347 Australian Securities and Investments Commission, Re Richstar Enterprises Pty Ltd v Carey (No 6) (2006) 153 FCR 509; [2006] FCA 814 Bailey (Liq) v Rock Solid Rendering Pty Ltd (in liq) ATF Rock Solid Trust [2020] FCA 600 Bell v Lever Brothers Ltd [1931] All ER Rep 1; [1932] AC 161 Boardman v Phipps [1966] 3 All ER 721; [1967] 2 AC 46 Boyd v Feeney [2017] NSWSC 1595 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Canberra Residential Developments Pty Ltd v Brendas (2010) 188 FCR 140; [2010] FCAFC 125 Centura Global Holdings Pty Ltd (2016) 111 ACSR 185; [2016] NSWSC 62 Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37 Corbett v Corbett Court Pty Ltd (2015) 109 ACSR 296; [2015] FCA 1176 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; (1978) 19 ALR 223 Dulhunty v Dulhunty [2010] NSWSC 1465 Elders Trustee & Executor Co Ltd v Higgins [1964] ALR 408; (1963) 113 CLR 426 Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688; [1998] NSWSC 413 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 Gartside v Inland Revenue Commissioners [1968] AC 553 Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 Grocon Constructions Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 572 Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 HWG Holdings Pty Ltd v Fairlie Court Pty Ltd (2015) 302 FLR 230; [2015] VSC 519 IceTV Pty Ltd v Ross [2008] NSWSC 1321 In the matter of Amazon Pest Control Pty Limited [2012] NSWSC 1568 In the matter of Austral Alloys Pty Limited [2017] NSWSC 1833 In the matter of Bicher & Son Pty Ltd (2020) 147 ACSR 108; [2020] NSWSC 711 In the matter of Catombal Investments Pty Ltd [2012] NSWSC 775 In the matter of Crow Inn Pty Limited [2020] NSWSC 601 In the matter of Denham Constructions Pty Limited [2016] NSWSC 1425 In the matter of El Zorro Transport Pty Ltd [2013] NSWSC 1082 In the matter of Glenvine Pty Limited (in liq) [2020] NSWSC 866 In the matter of Hayes Steel Framing Systems Pty Ltd (Administrators Appointed) [2017] NSWSC 385 In the matter of Motasea Pty Ltd (2014) 97 ACSR 589; [2014] NSWSC 69 In the matter of Pure Nature Sydney Pty Limited [2018] NSWSC 914 In the matter of Richardson & Wrench Holdings (2013) 97 ACSR 351; [2013] NSWSC 1990 International Hospitality Concepts Pty Limited v National Marketing Concepts Inc (No 2) (1994) 13 ACSR 368 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 233 CLR 115 at 135; [2007] HCA 61 Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited [1989] HCA 23; (1989) 166 CLR 623 Links Golf Tasmania Pty Ltd v Sattler (2012) 213 FCR 1; [2012] FCA 634 Love v Williams [2019] NSWSC 555 Mann v Paterson Constructions Pty Ltd [2019] HCA 32 Mopeke Pty Ltd v Airport Fine Foods Pty Ltd (2007) 71 ACSR 395; [2007] NSWSC 153 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692; (1987) 5 ACLC 222 Mudgee Dolomite & Lime Pty Limited v Murdoch [2020] NSWSC 1510 Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1996) 20 ACSR 553 R & I Bank of Western Australia Ltd v Anchorage Investments Pty Ltd (1992) 10 WAR 59 Re a company (No 00709 of 1992); O'Neill v Phillips [1999] 2 All ER 961; [1999] UKHL 24 Re Dernacourt Investments Pty Ltd (1990) 2 ACSR 553; (1990) 20 NSWLR 588 Re Docklands Chiropractic Clinic Pty Limited [2020] VSC 364 Re Docklands Chiropractic Clinic Pty Limited [2020] VSC 364 Re Indoor Climate Technologies Pty Ltd [2019] NSWSC 35 Re Knight, Second ICO Pty Ltd (in liq) (2020) 144 ACSR 329; [2020] FCA 608 Re London School of Electronics Ltd [1986] Ch 211 at 222; [1985] BCLC 273 at 279 Re Mogul Stud Pty Ltd [2012] NSWSC 1639 Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 279; (1987) 5 ACLC 184 Re Polyresins Pty Limited [1999] 1 Qd R 599; (1998) 12 ACLC 1674 Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484; (2014) 291 FLR 17 Ryder v Frohlich [2004] NSWCA 472 Shelton v National Roads and Motorists Association Ltd (NRMA Ltd) (2004) 51 ACSR 278; [2004] FCA 1393 Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620 Snell v Glatis (No 2) [2020] NSWCA 166 Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 84 ACSR 121; [2011] NSWCA 104 Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 Watson v Foxman (1995) 49 NSWLR 315 Watson v James [1999] NSWSC 600 Wayde v New South Wales Rugby League Limited (1985) 180 CLR 459; [1985] HCA 68 Workers Compensation Nominal Insurer v Denny Earthmoving & Bulk Haulage Pty Ltd [2008] NSWSC 1167 Workers Compensation Nominal Insurer v Perfume Empire Pty Ltd [2011] NSWSC 380 Texts Cited: Michael Lambiris in The Historical Context of Roman Law (William Gaunt & Sons 1997) JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (LexisNexis, 2016 Category: Principal judgment Parties: Netjay Pty Ltd (First Plaintiff) Basil Berrigan (Second Plaintiff) Crow Inn Pty Ltd (First Defendant) Phatso Investments Pty Ltd (Second Defendant) Joel Berrigan (Third Defendant) Puddy Pty Ltd (Fourth Defendant) Representation: Counsel: Mr LT Livingston (Plaintiffs) Mr GA Sirtes SC / Mr J Adamopoulos (Defendants)