In the matter of Australian International Yacht Club Pty Limited [2021] NSWSC 586

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Australian International Yacht Club Pty Limited [2021] NSWSC 586 Hearing dates: 20 – 23 April 2021 (last submissions 21 May 2021) Decision date: 25 May 2021 Jurisdiction: Equity - Corporations List Before: Black J Decision: Plaintiffs succeed in claims for breach of directors' duties and oppression. Plaintiffs fail in claims in respect of misleading and deceptive conduct. Parties to bring in agreed short minutes of order, or alternatively, their respective drafts with submissions as to the differences between them. Catchwords: CONSUMER LAW — Misleading or deceptive conduct — Reliance upon misleading representations — Representation as to profit — Representation as to visa application. CORPORATIONS — Members' rights and remedies — Oppression — Where director's conduct amounted to "commercial unfairness". EQUITY — Fiduciary duties — Breach — Rule in Barnes v Addy — Knowing involvement — Where director caused company to purchase asset from company controlled by his spouse — Whether relevant knowledge can be inferred — Whether knowledge can be imputed to company controlled by director's spouse. EQUITY — Fiduciary duties — Conflict of interest and duty — Where director caused company to purchase asset from company controlled by his spouse — Inadequate disclosure of material facts. RESTITUTION — Ineffective transactions — General principles — Restitution of money paid — Failure of consideration — Total failure rule — Whether total failure of consideration established. Legislation Cited: - Competition and Consumer Act 2010 (Cth) – Schedule 2, ss 18, 237 - Corporations Act 2001 (Cth), ss 181, 182, 232, 233 Cases Cited: - Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd (2016) 340 ALR 580; (2016) 116 ACSR 566; [2016] NSWCA 347 - Australian Competition and Consumer Commission v Fisher & Paykel Customer Services Pty Ltd [2014] FCA 1393 - Australian Competition and Consumer Commission v Jewellery Group Pty Ltd (2012) 293 ALR 335; [2012] FCA 848 - Australian Competition and Consumer Commission v Telstra Corporation Ltd (2007) 244 ALR 470; [2007] FCA 1904 - Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 - Australian Securities and Investments Commission v Australian Investors Forum Pty Ltd (No 2) (2005) 53 ACSR 305; [2005] NSWSC 267 - Australian Securities and Investments Commission v Drake (No 2) (2016) 340 ALR 75; (2016) 118 ACSR 189; [2016] FCA 1552 - Australian Securities & Investments Commission v Flugge and Geary (2016) 342 ALR 1; [2016] VSC 779 - Australian Securities and Investments Commission (ASIC) v Gallop International Group Pty Ltd (2019) 138 ACSR 395; [2019] FCA 1514 - Australian Worldwide Pty Ltd (In Liq) v AW Exports Pty Ltd [2019] NSWSC 1475 - Baltic Shipping Co v Dillon (1993) 176 CLR 344; [1993] HCA 4 - Barnes v Addy (1874) LR 9 Ch App 244 - Blythe v Northwood (2005) 63 NSWLR 531 - Boyd v Feeney [2017] NSWSC 1595 - Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 - Celermajer Holdings Pty Ltd v Kopas (2011) 16 BPR 30,735; [2011] NSWSC 40 - Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373; (1975) 5 ALR 231 - Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524; [2016] NSWCA 37 - Dentown Pty Ltd v PWI Group Pty Ltd (as trustee of the Australia No 1 Group Trust) (2019) 141 ACSR 330 - Digital Cinema Network Pty Ltd v Omnilab Media Pty Ltd (No 2) [2011] FCA 509 - EC Dawson Investments Pty Ltd v Crystal Finance Pty Ltd (No 3) [2013] WASC 183 - Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 - Forty Two International Pty Ltd v Barnes (2014) 97 ACSR 450; [2014] FCA 85 - Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Grimaldi v Chameleon Mining NL (No 2) (2012) 87 ACSR 260; [2012] FCAFC 6 - Hart Security Australia Pty Ltd v Boucousis (2016) 339 ALR 659; (2016) 117 ACSR 408; [2016] NSWCA 307 - Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; (2014) 101 ACSR 167; [2014] NSWCA 266 - John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 - Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 - Munstermann v Rayward [2017] NSWSC 133 - Netglory Pty Ltd v Caratti [2013] WASC 364 - One.Tel Ltd (in liq) v Rich (2005) 190 FLR 443; (2005) 53 ACSR 623; [2005] NSWSC 226 - Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 - Primacy Underwriting Agency Pty Ltd v Kilborn (2007) 25 ACLC 160; [2007] NSWSC 158 - Ramsay v BigTinCan Pty Ltd (2014) 101 ACSR 415; [2014] NSWCA 324 - Re Bicher & Son Pty Ltd (2020) 147 ACSR 108; [2020] NSWSC 711 - Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 - Re ICB Medical Distributors Pty [2018] NSWSC 1315 - Re Kit Digital Australia Pty Ltd (in Liq) [2014] NSWSC 1547 - Re Mudgee Dolomite & Lime Pty Ltd [2020] NSWSC 1510 - Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914 Re Sirrah Pty Ltd (in prov liq) [2021] NSWSC 413 - Redmond Family Holdings v GC Access Pty Ltd [2016] NSWSC 796 - Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 - Tomanovic v Global Mortgage Equity Corp Pty Ltd (2011) 84 ACSR 121; [2011] NSWCA 104 - Twigg v Twigg (No 4); Lambert v Twigg Investments Pty Ltd (No 3) (2020) 147 ACSR 389; [2020] NSWSC 1159 - Vanguard Financial Planners Pty Ltd v Ale (2018) 354 ALR 711; (2018) 125 ACSR 1; [2018] NSWSC 314 - Watson v Foxman (1995) 49 NSWLR 315 - Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68 - Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; (2012) 270 FLR 1; (2012) 89 ACSR 1; [2012] WASCA 157 - Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 Texts Cited: - K Mason, JW Carter & GJ Tolhurst, Mason & Carter's Restitution Law in Australia, 2nd ed 2008 Category: Principal judgment Parties: Hui Lin and Xiaonan Su (Plaintiffs) Jason Zong (First Defendant) Zhenhua Tang (Second Defendant) J & G Holding Group Pty Ltd (Third Defendant) Australian International Yacht Club Pty Ltd (Fourth Defendant) Representation: Counsel: Mr G Campbell (Plaintiffs) Mr M W Young SC (First Defendant) Mr D Ratnam (Second Defendants)