Girish Dahyabhai Patel v Agromin (Aust.) Pty Limited [2015] NSWSC 282

Supreme Court New South Wales

Medium Neutral Citation: Girish Dahyabhai Patel v Agromin (Aust.) Pty Limited [2015] NSWSC 282 Hearing dates: 20 March 2015 Date of orders: 20 March 2015 Decision date: 20 March 2015 Before: Young AJA Decision: Application dismissed with costs Catchwords: PRACTICE AND PROCEDURE – discovery – preliminary discovery – applicant's failure to undertake reasonable inquiries Legislation Cited: Corporations Act 2001 (Cth), s 1322 Uniform Civil Procedure Rules 2005 (NSW), r 5.3 Cases Cited: Nagel v Hough [1927] NSWStRp 56; (1927) 27 SR (NSW) 418 Category: Principal judgment Parties: Girish Dahyabhai Patel (Plaintiff) Agromin (Aust.) Pty Limited (ACN 003 488 613) (Defendant) Representation: Counsel: Mr J Hynes (Plaintiff) Dr AJ Greinke (Defendant)

Solicitors: Minter Ellison (Plaintiff) Lodhia Lawyers Pty Ltd (Defendant) File Number(s): 2014/00286849

Judgment - EX TEMPORE 1. HIS HONOUR: This is an application under Rule 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for preliminary discovery. 2. The apparent background facts are that, prior to her death on 29 September 2011, Mrs Patel was the proprietor of 225,000 shares in the defendant company, a company which is incorporated in New South Wales. The share certificate, for some reason which is hard to fathom, certifies that the shareholder is Mrs Patel as trustee for the Mrs P D Patel Discretionary Settlement of Guernsey, which is said to be in the United Kingdom which, of course, it is not. It is part of a Duchy of Normandy. 3. The facts would appear to be that probate of Mrs Patel's will was granted in England and it was granted to Yashwant Patel, the brother of the present plaintiff and a former trustee of the Mrs P D Patel Discretionary Trust. 4. The facts would appear to be that, in England, a person who is an executor of an estate also becomes the trustee of trusts, of which the deceased person was formally trustee and, accordingly, Yashwant Patel became trustee of this Guernsey trust. 5. It would not appear that any reseal of the probate was ever obtained in New South Wales. Accordingly, there is no-one who is considered to be the executor of the estate in New South Wales; see Nagel v Hough [1927] NSWStRp 56; (1927) 27 SR (NSW) 418. 6. There is no doubt that a meeting of the defendant company was called for 8 February 2013, for the purpose of considering a buy back. 7. On the facts as I have them today, which are not necessarily exhaustive, it would appear that no proper representative of the estate of Mrs Patel ever had notice of a meeting and so the odds are that, apart from an application made under s 1322 of the Corporations Act 2001 (Cth), the meeting may not have been valid, nor any resolution valid. 8. It would seem that the returns made in respect of the buy back to ASIC were defective in that, at least, one of them was either wrongly submitted, or alternatively, mistakenly submitted. It would also seem that the company has paid, in respect of the alleged buy back, Yashwant Patel a large sum of money, when it may well be that he had no entitlement to receive it. This was because, under the Articles of Association of the company, the company could only deal with the executor in New South Wales of Mrs Patel and Yashwant did not fulfil that role. 9. However, whilst those facts and, indeed, the attitude shown by the defendant generally and the correspondence gives rise for very great cause for suspicion that there has been improper conduct, that is not really the matter that I have to deal with in this application. 10. I have to consider under r 5.3 of the UCPR, a number of matters, particularly, whether the plaintiff may have a cause of action and whether the plaintiff has made sufficient inquiry, but yet cannot find sufficient material to enable him or her to make a proper decision as to whether to commence proceedings. 11. I should add that that last matter is now made more important because of the rules that now govern the Bar and solicitors that they are not to commence proceedings alleging fraud unless there is a sound basis for doing so. Accordingly, courts are now a little more liberal in granting preliminary discovery than perhaps they once were. But what is the cause of action that the plaintiff has? He is, I will assume for present purposes, the present trustee of the Mrs P D Patel Discretionary Trust of Guernsey. It would seem that that trust was, before the buy back, the proprietor of 225,000 shares, but to say that is to ignore real barriers to the claim. Corporate personality is something that must be observed and one does not draw the veil unless one is in a very special set of situations, of which this is not one. Furthermore, there is a difference between the legal owner of property and the equitable owner of property. 12. In company law, whilst the fact that shares are not held beneficially can now be officially noted, the company only recognises the legal owner of the shares and if the legal owner of the shares is deceased, his or her executor. Mr Girish Patel, the present plaintiff, is neither. Accordingly, any action that there may be in respect of this buy back is, at least, not at the moment, his action. It may become his action if he becomes the administrator of the estate in New South Wales, but that is another matter. 13. Furthermore, as a general rule, actions to deal with irregular company buy backs are vested in ASIC, rather than vested in the people who might lose out by them. Again, Mr Girish Patel does not have a cause of action. Even though, at this stage, the test is very weak, that is, whether there may be a proper claim, I do not consider that the plaintiff has established even that. 14. Though it seems fairly clear that there is bad relations between members of the family involved in this case, it is remarkable that there is no evidence before me that inquiries have been made of Yashwant Patel and other people involved, rather than just an attack on the company to provide very extensive documents. Thus, I am not satisfied that all full inquiries have been made at this stage. It follows that the present application must be dismissed with costs. 15. However, as I said during argument, there are problems in this case and it may well be that the interests which the present plaintiff represents have some sort of claim and it would be very wise for the parties to get together and see if they can solve their problems without having to spend more money on legal costs.