Mualim v Dzelme [2021] NSWCA 199

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Mualim v Dzelme [2021] NSWCA 199 Hearing dates: 26 February 2021 Date of orders: 3 September 2021 Decision date: 03 September 2021 Before: Bathurst CJ at [1] Gleeson JA at [2] Brereton JA at [192] Decision: (1) Appeal allowed. (2) Set aside the orders of the primary judge made on 11 September 2020. (3) In lieu, make the following orders: (a) Declare that the allotment of 1,800 fully paid ordinary shares of $1.00 each in the capital of Pacific Springs Pty Ltd ACN 093 846 309 made on 16 March 2004 was invalid; (b) Order pursuant to s 175 of the Corporations Act 2001 (Cth) that the register of members of Pacific Springs Pty Ltd ACN 093 846 309 be rectified by the expungement of all entries made purportedly recording the allotment of shares referred to in Order (a) above; (c) Declare that the first respondent, Ricards Dzelme, is not a director or secretary of the second respondent; and (d) Defendants to pay the plaintiffs' costs. (4) Respondents to pay the appellants' costs in this Court. (5) Grant liberty to the appellants to apply on three days' notice for consequential relief in relation to monies paid into court by the appellants as security for costs of the proceedings below and the appeal, if the parties cannot agree on orders for payment out of court of such monies. Catchwords: CORPORATIONS – shares – exercise of power to allot shares – where director of family company allotted shares to himself – where effect of allotment was to confer control of company on the director – where hearsay evidence that director provided paperwork concerning allotment to shareholders – where no evidence of paperwork or content of paperwork – whether shareholders gave fully informed consent to allotment – whether share allotment should be set aside EQUITY – defences – laches – knowledge of the wrong – where impugned share allotment occurred in 2004 – where director of company has since passed away – where appellants reside in Indonesia and speak minimal English – whether appellants had means of knowledge of the wrong – whether respondents pleaded that appellants could have searched public records and ran that defence below EVIDENCE – expert evidence – whether letter from overseas lawyers in the nature of an investigative report was expert evidence – whether the primary judge erred in rejecting the tender of the evidence – whether the primary judge should have waived the rules of evidence – Evidence Act 1995 (NSW), s 190 Legislation Cited: Corporations Act 2001 (Cth), ss 175, 251A, 1305(1) 1322(4) Evidence Act 1995 (NSW), ss 63, 69, 79, 140, 190 Supreme Court Act 1970 (NSW), s 75A Uniform Civil Procedure Rules 2005 (NSW), rr 31.19, 31.23(3), 31.27, 31.28, 42.1 Cases Cited: Advanced Holdings Pty Ltd as Trustee for The Demian Trust v Commissioner of Taxation [2021] FCAFC 135 Ampol Petroleum Ltd v R W Miller (Holdings) Ltd [1972] 2 NSWLR 850 Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287; (2009) 71 ACSR 368 Banque Commerciale S.A. (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) and (No 10) (2008) 39 WAR 1; [2008] WASC 239; [2009] WASC 107 Bester v Perpetual Trustee Co Ltd [1970] 3 NSWLR 30 Berry v CCL Secure Pty Ltd [2020] HCA 27; (2020) 94 ALJR 715 Blackmagic Design Pty Ltd v Overliese (2011) 191 FCR 1; [2011] FCAFC 24 Blatch v Archer (1774) 98 ER 969 Boardman v Phipps [1967] 2 AC 46 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Commonwealth Bank of Australia v Smith (1991) 42 FCR 390 Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 Darvall v North Sydney Brick & Tile Co Ltd (1989) 16 NSWLR 260 ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Gerace v Auzhair Supplies Pty Ltd (in liq) (2014) 87 NSWLR 435; [2014] NSWCA 181 Gosford Christian School Ltd v Totonjian [2006] NSWSC 725; (2006) 201 FLR 424 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 House v The King (1936) 55 CLR 499; [1936] HCA 40 Howard Smith Ltd v Ampol Petroleum Ltd [1974] 1 NSWLR 68; [1974] AC 821 Johnson v Mackinnon [2021] NSWCA 152 Kokotovich Constructions Pty Ltd v Wallington (1995) 17 ACSR 478 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 Life Association of Scotland v Siddal (1861) 3 De GF&J 58 Maaz v Fullerton Property Pty Ltd [2021] NSWCA 79 Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23 Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 204 Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 Savage v Lunn [1998] NSWCA 204 Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 Vetter v Lake Macquarie City Council (2001) 202 CLR 439; [2001] HCA 12 Warner Capital Pty Ltd v Shazbot Pty Ltd [2020] NSWCA 121 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285; [1987] HCA 11 Texts Cited: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity Doctrines & Remedies (5th ed, 2015, LexisNexis Butterworths) Category: Principal judgment Parties: Gani Mualim (First appellant) Jorida Mualim (Second appellant) Ricards Dzelme (First respondent) Pacific Springs Pty Ltd (Second respondent) Representation: Counsel: D Grieve QC (Appellants) D R Pritchard SC / A Macauley (Respondents)