In the matter of Bio Health Pharmaceuticals Pty Ltd [2020] NSWSC 1790

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Bio Health Pharmaceuticals Pty Ltd [2020] NSWSC 1790 Hearing dates: 10 December 2020 Decision date: 10 December 2020 Jurisdiction: Equity Before: Leeming JA Decision: 1. The following orders are made:

"1. A declaration that, in all the circumstances, the Second Share Issue was invalid and of no effect. 4. An order pursuant to section 233 of the Corporations Act: (a) setting aside the Second Share Issue; (d) removing the Third, Fourth and Fifth Defendants as directors of BHP." In these orders,

"BHP" is defined as Bio Health Pharmaceuticals Pty Ltd (ACN 142 070 344);

"Second Share Issue" is defined as the issue by BHP of: (a) 2,592,333 ordinary class shares to the Fifth Defendant, Lili Pan; and (b) 1,111,000 ordinary class shares to the Second Defendant, Samuel Sieng Heng, on 17 June 2019.

2. The First, Third, Fourth and Fifth Defendants pay the Plaintiff's costs.

3. Liberty to the Plaintiff to provide a note in support of prayer 2 of the Originating Process filed 2 April 2020.

4. Liberty to the Plaintiff to apply on 24 hours' notice by email to the Associate of Leeming JA in relation to such further orders as may be sought in relation to prayers 2 and 4(c) of the Originating Process filed 2 April 2020. Catchwords: CORPORATIONS - oppression - share issue by first defendant with effect of diluting plaintiff from 70% to 15% shareholder - share issue made 2 days before company obliged to make $3m payment to lender – lender's security included charge over all shares in the plaintiff - evidence that no money received for shares - absence of any explanation for dilution - one director of first defendant resident in Australia - Australian director did not oppose relief - remaining defendants residents of China - two of three Chinese directors appeared, retained solicitors and counsel, and advised plaintiff and the Court that they consented to orders sought - less than 24 hours before hearing, Chinese directors terminated authority of their solicitors - Chinese directors did not appear at hearing - finding that share issue was oppressive - orders setting aside share issue and removing directors made Legislation Cited: Corporations Act 2001 (Cth), ss 181, 182, 201A, 232, 233, 236, 247A Uniform Civil Procedure Rules 2005, rr 7.27, 10.14, 11.4, 11.8AA Cases Cited: Australian Securities and Investments Commission v Youi Pty Ltd [2020] FCA 1701 Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 In the matter of ACN 607 358 887 (formerly known as Carzapp Pty Ltd) [2019] NSWSC 1561 In the matter of Bicher & Son Pty Ltd [2020] NSWSC 711 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Pham v Gall [2020] NSWCA 116 Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53; [2003] HCA 75 Seaham Grange Pty Ltd v John Farragher Pty Ltd [2019] NSWSC 1847; 142 ACSR 11 Vacuum Oil Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285; [1987] HCA 11 Category: Principal judgment Parties: Hilly Woodland Pty Ltd (Plaintiff) Bio Health Pharmaceuticals Pty Ltd (First defendant) Samuel Sieng Heng (Second defendant) Hongwei Cai (Third defendant) Ming Sing Barton Tso (Fourth defendant) Lili Pan (Fifth defendant) Representation: Counsel: E A Hyde; R J Pietriche (Plaintiff) W R Chan (Second defendant) No appearance for First, Third, Fourth and Fifth defendants