In the matter of Anna Bay Resort Pty Ltd [2022] NSWSC 331

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Anna Bay Resort Pty Ltd [2022] NSWSC 331 Hearing dates: 1–3 February 2022; last submissions 22 February 2022 Date of orders: 30 March 2022 Decision date: 30 March 2022 Jurisdiction: Equity - Corporations List Before: Rees J Decision: 1. Set aside the issue of shares in Anna Bay Resort Pty Ltd (the Company) on 15 August 2020 and the allotment of those shares to the second defendant. 2. Appoint a liquidator of the Company. 3. Authorise the first plaintiff to prosecute proceedings on behalf of the Company against the first defendant. 4. Order the first defendant to compensate the Company by payment of $67,030 with interest. 5. By consent, judgment against the Company in favour of the second plaintiff in the sum of $300,000 with interest. 6. Judgment against the first defendant in favour of the second plaintiff in the sum of $100,000. 7. Order the first and second defendants to pay the plaintiffs' costs and the Company's costs of the proceedings. Catchwords: CORPORATIONS — oppression — special purpose company to acquire development site — agreement to contribute equally to acquisition of property – equal shareholders – plaintiff lends his half of purchase price to the company – defendant raises his half by loan secured over the property, which he guarantees — plaintiff ceases to be director and shareholder to ensure not liable for loan guaranteed by defendant — plaintiff controls bank accounts — defendant fails to service loan – plaintiff provides further working capital — plaintiff requests resumption of shareholding and directorship – defendant opens secret bank account — scramble for control — odd payments from secret bank account to defendant's company – breakdown of relationship – defendant holds invalid meeting of members where resolved to issue shares – defendant subscribes for shares and uses capital to repay his loan to the company – property sold. OPPRESSION — s 233(1)(g) Corporations Act, at [165]-[168] — principles at [169]-[173] — relief from oppression at [187]-[189] — plaintiff authorised to bring proceedings in name of the company — set aside share issue – defendant to compensate company for odd payments. CORPORATIONS — winding up on just and equitable grounds — s 461(1)(k) Corporations Act — principles at [204]-[207] – oppression — irretrievable breakdown of relationship — sole director unsuited to deal with substantial proceeds of sale — liquidator appointed. EQUITY — specific performance — defendant undertakes to repay plaintiff's loan from deposit —specific performance refused as plaintiff entitled to interest and will be repaid shortly. EVIDENCE — principal witnesses unreliable and little documentary evidence — onus and inferences. Legislation Cited: Corporations Act 2001 (Cth) ss 232, 233(1)(g), 236, 237, 461(1)(k), 467, 1317H, 1325 Evidence Act 1995 (NSW) s 140(2) Cases Cited: A v New South Wales (2007) 230 CLR 500; [2007] HCA 10 Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; (2008) 66 ACSR 325 Ashburton Oil NL v Alpha Minerals NL (1971) 45 ALJR 162; (1971) 123 CLR 614 Asia Pacific Joint Mining Pty Limited v Allways Resources Holdings Pty Limited (2018) [2018] 3 Qd R 520; [2018] QCA 048 Australian Competition and Consumer Commission v Metcash Trading Ltd (2011) 198 FCR 297; [2011] FCAFC 151 Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 348 ALR 227 Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969 Boyd v Feeney [2017] NSWSC 1595 Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 Ferguson v Wilson (1866) LR 2 Ch App 77 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [1998] NSWSC 413; (1998) 28 ACSR 688 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97; (2001) 37 ACSR 672 Gerard Cassegrain & Co Pty Ltd v Cassegrain (2013) 87 NSWLR 284; [2013] NSWSC 453 Great Investments Ltd v Warner (2016) 243 FCR 516; [2016] FCAFC 85 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 Petroleum Ltd [1974] 1 NSWLR 68; [1974] AC 821 Hungerfords v Walker (1989) 171 CLR 125; (1989) 84 ALR 119 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 Catombal Investments Pty Ltd [2012] NSWSC 775 In the matter of Crow Inn Pty Limited [2020] NSWSC 601 In the matter of Crow Inn Pty Ltd (No 2) [2020] NSWSC 1746 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 Mopeke Pty Ltd v Airport Fine Foods Pty Ltd [2007] NSWSC 153; (2007) 71 ACSR 395 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] NSWSC 342; (2009) 71 ACSR 343 Neville v Lam (No 3) [2014] NSWSC 607 Ngurli Ltd v McCann (1953) 90 CLR 425; (1953) 27 ALJR 349 Page v Newman (1829) 9 B & C 378 at 381; 109 ER 140 Power v Ekstein [2009] NSWSC 130 President of India v La Pintada Compania Navigacion SA [1985] AC 104 Re a company (No 00709 of 1992); O'Neill v Phillips [1999] 2 All ER 961; [1999] UKHL 24 Re Docklands Chiropractic Clinic Pty Limited [2020] VSC 364 Re London School of Electronics Ltd [1986] Ch 211 at 222; [1985] BCLC 273 Rhesa Shipping Co SA v Edmunds [1985] 1 WLR 948 Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd [2008] NSWCA 39 Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262; [2000] NSWCA 29 Shelton v National Roads and Motorists Association Ltd (NRMA Ltd) [2004] FCA 1393; (2004) 51 ACSR 278 Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 Tomanovic v Global Mortgage Equity Corporation Pty Ltd [2011] NSWCA 104; (2011) 84 ACSR 121 Wayde v New South Wales Rugby League Limited (1985) 180 CLR 459; [1985] HCA 68 Texts Cited: John Henry Wigmore, Wigmore on Evidence (3rd ed., 1940) Category: Principal judgment Parties: Timesgarden Pty Ltd (First Plaintiff) Wilson Hu (Second Plaintiff) Frank Shi (First Defendant) Wisemans Group Pty Ltd (Second Defendant) Anna Bay Resort Pty Ltd (Third Defendant) Representation: Counsel: Mr G Campbell (Plaintiffs) Mr RD Marshall SC / Mr M Rose (Defendants)