“You complied with the contract by paying someone else, but pay me too!”___P and their (then) spouse, X, agreed to lend $1m to D. The money - which was actually P’s solely - was lent: [1]X directed D to repay the money into one of X’s accounts. D did so. At this time P and X were separated. They later divorced: [2]P sued X for the money and, X having been made bankrupt, expects receive under $20K from X on account of their claim: [4]P went on to sue D alleging breach of the agreement and negligence: [5]D said X had actual or ostensible authority to direct the payment. D also said that by suing X, P made an election to pursue X rather than P and so ratified X’s conduct: [6]D was a developer. When P and X were introduced to D they were asked for a refundable for a development, and nominated a joint bank account for the refund if necessary: [8]X agreed to buy a unit in the development and later added P’s name. There were subsequent EOIs for other units: [9], [10]P and X entered into a note facility agreement with D: [17]X provided D with $1m in bank cheques - the $1m being P’s money X held on trust: [18]Interest was initially paid into a P and X joint account: [19]X sought for refundable deposits to be repaid to an account of his choosing, which they were: [21]P introduced herself to D and had various discussions about possible developments, the refunded deposits, and disclosed the marital difficulties between P and X: [23] - [28]Ahead of the expiry of the notes facility, D asked X where the $1m should be repaid. X nominated an account that was solely X’s and it was paid there: [31], [32]P pursued X for the $1m, and X was bankrupted on P’s application: [35], [36]P now turned their attention to suing D.Two questions arose. Did D discharge its obligations by paying X? By suing X did P make an election from which the couldn’t resile?: [37]After giving the issue lengthy consideration, the Court found D was OK to make payment to an acct nominated by the “Lender”, and that X’s nomination met this: [52], [56], [68]X did not have authority to nominate on P’s behalf *BUT* D nonetheless complied with the contract by making payment *HOWEVER* the question of whether P was still entitled to pursue D for the debt remained: [69]An act done without authority can be ratified by the person on whose behalf the act was done: [72]Once ratification happens, the principal cannot then exercise rights that are inconsistent with the ratification: [73]P original claim against X proceeded on the basis that P had rights to bring the claim against X. By making that claim, and seeking to enforce that judgment P ratified the acts of X: [78]P did not dispute this analysis specifically, but pursued D on the basis of a breach of contract. This claim failed. By repaying X, D had complied with their contractual obligations: [79]The application was dismissed with P obliged to pay D’s legal costs: [90]  ___  Please look out for Coffee and a Case Note on your favourite platform and give me a follow!

“You complied with the contract by paying someone else, but pay me too!” ___ P and their (then) spouse, X, agreed to lend $1m to D. The money - which was actually P’s solely - was lent: [1] X directed D to repay the money into one of X’s accounts. D did so. At this time P and X were separated. They later divorced: [2] P sued X for the money and, X having been made bankrupt, expects receive under $20K from X on account of their claim: [4] P went on to sue D alleging breach of the agreement and negligence: [5] D said X had actual or ostensible authority to direct the payment. D also said that by suing X, P made an election to pursue X rather than P and so ratified X’s conduct: [6] D was a developer. When P and X were introduced to D they were asked for a refundable for a development, and nominated a joint bank account for the refund if necessary: [8] X agreed to buy a unit in the development and later added P’s name. There were subsequent EOIs for other units: [9], [10] P and X entered into a note facility agreement with D: [17] X provided D with $1m in bank cheques - the $1m being P’s money X held on trust: [18] Interest was initially paid into a P and X joint account: [19] X sought for refundable deposits to be repaid to an account of his choosing, which they were: [21] P introduced herself to D and had various discussions about possible developments, the refunded deposits, and disclosed the marital difficulties between P and X: [23] - [28] Ahead of the expiry of the notes facility, D asked X where the $1m should be repaid. X nominated an account that was solely X’s and it was paid there: [31], [32] P pursued X for the $1m, and X was bankrupted on P’s application: [35], [36] P now turned their attention to suing D. Two questions arose. Did D discharge its obligations by paying X? By suing X did P make an election from which the couldn’t resile?: [37] After giving the issue lengthy consideration, the Court found D was OK to make payment to an acct nominated by the “Lender”, and that X’s nomination met this: [52], [56], [68] X did not have authority to nominate on P’s behalf *BUT* D nonetheless complied with the contract by making payment *HOWEVER* the question of whether P was still entitled to pursue D for the debt remained: [69] An act done without authority can be ratified by the person on whose behalf the act was done: [72] Once ratification happens, the principal cannot then exercise rights that are inconsistent with the ratification: [73] P original claim against X proceeded on the basis that P had rights to bring the claim against X. By making that claim, and seeking to enforce that judgment P ratified the acts of X: [78] P did not dispute this analysis specifically, but pursued D on the basis of a breach of contract. This claim failed. By repaying X, D had complied with their contractual obligations: [79] The application was dismissed with P obliged to pay D’s legal costs: [90] ___ Please look out for Coffee and a Case Note on your favourite platform and give me a follow!

Shao v Crown Global Capital Pty Limited [2023] NSWSC 820

“That’s my warehouse, or at least half of it is…”___From its purchase in 2010 P and D were registered as 50-50 TiC co-owners of a warehouse. P was D’s parent.P had borrowed the money to buy the property. D operated a business from the property until 2012 when it become non-viable: [4]From 2017 the property was leased with all rental proceeds being paid to D: [7]P commenced proceedings (not by tutor, but following some earlier litigation about P being able to represent P due to P’s Alzheimer’s) seeking orders that D holds their 50% interest for P, that s66G trustees be appointed, and that D account for 50% of rental proceeds: [8], [16]D’s father - P’s former spouse - died in 1990. The estate passed unequally, and in large part to D’s siblings (with none to P). D said this unequal distribution was relevant background for P buying him at least part of the property: [25] - [33]There was very little admissible evidence that D held their 50% share on trust for P: [42]P’s child, who is D’s sibling, gave evidence in support of P’s application. The evidence suggested P wanted the property wanted the property sold from around 2012 but that was not conclusive in relation to the parties’ legal rights: [44] - [53]D said that P had “always” said they would bequeath the property to D in their will: [54]Over the years D brought various investment opportunities to P, which they sometimes invested in, including (unsuccessfully) a Kenyan gold mine: [61]Various letters prepared by P were tendered. Ultimately these did not assist due to uncertainty about P’s mental capacity at the time they were prepared: [86]P was unable to demonstrate D held their 50% share on trust for P: [87]The Court considered, on the balance of probabilities, that it was more likely that P intended to assist D by the purchase of the property making him 50% owner: [88]While other possibilities might arise, the Court considered that: “(t)here is simply a dearth of evidence and speculation does not assist”: [92]D did not press their initial claim that they were in fact the 100% owner: [93] - [96]D asserted that P gifted them the rental income from 2017 to 2022. This was not accepted. P was in a difficult financial position, suffering from Alzheimer’s, and a number of requests were made for P’s share of the rent. This stood in the way of the Court finding the rent was gifted to D: [108]It was ordered that D pay to P 50% of the rent D had collected: [111]P sought appointment of s66G trustees. D resisted on irrelevant bases. The Court noted hardship or unfairness was not a barrier to making of s66G orders: [117]The Court appointed the s66G trustees.Regarding costs - s66G costs are normally paid out of the trust corpus. However, noting P succeeded in their rental income claim and failed in their resulting trust claim, the Court ordered that only 50% of their costs be paid from the proceeds of the property’s sale: [126]  ___  And please look out for James d'Apice and Coffee and a Case Note on your favourite platform!

“That’s my warehouse, or at least half of it is…” ___ From its purchase in 2010 P and D were registered as 50-50 TiC co-owners of a warehouse. P was D’s parent. P had borrowed the money to buy the property. D operated a business from the property until 2012 when it become non-viable: [4] From 2017 the property was leased with all rental proceeds being paid to D: [7] P commenced proceedings (not by tutor, but following some earlier litigation about P being able to represent P due to P’s Alzheimer’s) seeking orders that D holds their 50% interest for P, that s66G trustees be appointed, and that D account for 50% of rental proceeds: [8], [16] D’s father - P’s former spouse - died in 1990. The estate passed unequally, and in large part to D’s siblings (with none to P). D said this unequal distribution was relevant background for P buying him at least part of the property: [25] - [33] There was very little admissible evidence that D held their 50% share on trust for P: [42] P’s child, who is D’s sibling, gave evidence in support of P’s application. The evidence suggested P wanted the property wanted the property sold from around 2012 but that was not conclusive in relation to the parties’ legal rights: [44] - [53] D said that P had “always” said they would bequeath the property to D in their will: [54] Over the years D brought various investment opportunities to P, which they sometimes invested in, including (unsuccessfully) a Kenyan gold mine: [61] Various letters prepared by P were tendered. Ultimately these did not assist due to uncertainty about P’s mental capacity at the time they were prepared: [86] P was unable to demonstrate D held their 50% share on trust for P: [87] The Court considered, on the balance of probabilities, that it was more likely that P intended to assist D by the purchase of the property making him 50% owner: [88] While other possibilities might arise, the Court considered that: “(t)here is simply a dearth of evidence and speculation does not assist”: [92] D did not press their initial claim that they were in fact the 100% owner: [93] - [96] D asserted that P gifted them the rental income from 2017 to 2022. This was not accepted. P was in a difficult financial position, suffering from Alzheimer’s, and a number of requests were made for P’s share of the rent. This stood in the way of the Court finding the rent was gifted to D: [108] It was ordered that D pay to P 50% of the rent D had collected: [111] P sought appointment of s66G trustees. D resisted on irrelevant bases. The Court noted hardship or unfairness was not a barrier to making of s66G orders: [117] The Court appointed the s66G trustees. Regarding costs - s66G costs are normally paid out of the trust corpus. However, noting P succeeded in their rental income claim and failed in their resulting trust claim, the Court ordered that only 50% of their costs be paid from the proceeds of the property’s sale: [126] ___ And please look out for James d'Apice and Coffee and a Case Note on your favourite platform!

Perkins v Carey [2023] NSWSC 210

“But you’re who’s stopping the Co from bringing the claim!?”___The Ps (a parent and their child) were the dirs and only shareholders of the D. The D was trustee of an SMSF and the Ps were beneficiaries: [1], [2]The Ps, proceeding without legal advice, sought leave to cause D to sue for some alleged trust property: shares.The Ps said FormerTCo, a former Tee of the SMSF, owned shares in OtherCo, that FormerTCo became deregistered, and the shares (which the Ps said were trust property) were unlawfully bought back by OtherCo: [5]The Ps sought leave to cause the D to sue OtherCo to get the shares back. (A claim against the Commonwealth was not pressed): [5], [6]The Ps said they could not cause D to commence the proceedings as to do so would breach their fiduciary duties: [7]The evidence regarding the alleged buy-back was unclear and included heavy redactions: [13] - [23]In 2016 FormerTCo resigned and was later deregistered. The Ps appointed themselves trustees. In 2022 they retired as trustees and appointed the D: [25] - [27]The Court was left to consider the s237 derivative action criteria: [30]s237(2)(a): the Court found D would not bring the proceedings, but that was only because the Ps refused to cause it to do so: [33] - [38]s237(2)(b): the Court found Ps’ application was not brought in good faith. It was the Ps’ conduct that prevented D from bringing the application. The purpose of the derivative action is the opposite - to allow people *without* control of a company to bring proceedings on its behalf: [39] - [43]s237(2)(c): the Court considered it was not in D’s best interests that leave be granted as the Ps’ indemnity was insufficient, and the claim’s prospects were poor: [44] - [46]s237(2)(d): the Court found there was “little more than bare assertion” to suggest the buyback was unlawful or improper, but the evidence did disclose a serious question to be tried: [48]The facts were the subject of twelve (!) other related pieces of litigation over the years from 2013: [52]The Ps’ heavily redacted evidence and failure to disclose apparently relevant matters traversed in the other litigation left the Court in a state of “considerable disquiet” about whether the entire position had been disclosed by the Ps: [53]Questions of abuse of process and Anshun estoppel also arose, without sufficient evidence to make a definite finding: [54]Noting a number of criteria for leave had not been satisfied, leave to bring the derivative action was refused: [60]The Ps also sought a mandatory injunction requiring D to bring the proceedings but failed to show they would suffer grave damage if the injection were not granted, nor to indemnify D: [62]The Ps’ application failed. ___ And please don't forget to follow Coffee and a Case Note on your favourite platform! www.linkedin.com/in/jamesdapice

“But you’re who’s stopping the Co from bringing the claim!?” ___ The Ps (a parent and their child) were the dirs and only shareholders of the D. The D was trustee of an SMSF and the Ps were beneficiaries: [1], [2] The Ps, proceeding without legal advice, sought leave to cause D to sue for some alleged trust property: shares. The Ps said FormerTCo, a former Tee of the SMSF, owned shares in OtherCo, that FormerTCo became deregistered, and the shares (which the Ps said were trust property) were unlawfully bought back by OtherCo: [5] The Ps sought leave to cause the D to sue OtherCo to get the shares back. (A claim against the Commonwealth was not pressed): [5], [6] The Ps said they could not cause D to commence the proceedings as to do so would breach their fiduciary duties: [7] The evidence regarding the alleged buy-back was unclear and included heavy redactions: [13] - [23] In 2016 FormerTCo resigned and was later deregistered. The Ps appointed themselves trustees. In 2022 they retired as trustees and appointed the D: [25] - [27] The Court was left to consider the s237 derivative action criteria: [30] s237(2)(a): the Court found D would not bring the proceedings, but that was only because the Ps refused to cause it to do so: [33] - [38] s237(2)(b): the Court found Ps’ application was not brought in good faith. It was the Ps’ conduct that prevented D from bringing the application. The purpose of the derivative action is the opposite - to allow people *without* control of a company to bring proceedings on its behalf: [39] - [43] s237(2)(c): the Court considered it was not in D’s best interests that leave be granted as the Ps’ indemnity was insufficient, and the claim’s prospects were poor: [44] - [46] s237(2)(d): the Court found there was “little more than bare assertion” to suggest the buyback was unlawful or improper, but the evidence did disclose a serious question to be tried: [48] The facts were the subject of twelve (!) other related pieces of litigation over the years from 2013: [52] The Ps’ heavily redacted evidence and failure to disclose apparently relevant matters traversed in the other litigation left the Court in a state of “considerable disquiet” about whether the entire position had been disclosed by the Ps: [53] Questions of abuse of process and Anshun estoppel also arose, without sufficient evidence to make a definite finding: [54] Noting a number of criteria for leave had not been satisfied, leave to bring the derivative action was refused: [60] The Ps also sought a mandatory injunction requiring D to bring the proceedings but failed to show they would suffer grave damage if the injection were not granted, nor to indemnify D: [62] The Ps’ application failed. ___ And please don't forget to follow Coffee and a Case Note on your favourite platform! <a href="http://www.linkedin.com/in/jamesdapice" rel="nofollow" target="_blank">www.linkedin.com/in/jamesdapice</a>

Tydeman v Asgard Group Pty Limited [2023] FCA 486

"This motel ain't big enough for the both of us!"  ___  Two families operated a motel together until their relationship deteriorated.  2XD owned the land the motel was operated on and leased it to 1XD, a Co co-owned by 2XD: [2]  2XC had assisted 2XD over the years, and came to assist with the motel: [13] - [17]  The arrangements (for 2XC to help at the motel, and to eventually purchase it from 2XD having paid a deposit) were informal and legally unclear - an arrangement defined by “uncertainty, if not confusion”: [24]  1XC (who was in a domestic partnership with 2XC) ran a separate business providing accomodation among other things. After a time 1XC obtained an EFTPOS machine to accept payments: [37] - [41]  2XD stopped payments to the XCs for their work at the motel, apparently planning to set those “non payments” against an eventual purchase price: [42]  Sometimes the 2XC used the EFTPOS machine for motel payments: [44]  This diverted funds away from the XDs’ motel bank account: [46]  In early 2020, 2XD decided they did not want to proceed with the sale: [47]  In around July 2020, the XDs forcibly evicted the XCs and commenced legal proceedings: [48], [49]  The dispute crystallised into arguments which parties owed what money, and why: [51]  Complexity arose from the messiness of the legal relationship: [52]  The XCs were not employees, nor did they have an “equitable lease”, nor were they agents, nor did any equitable relationship arise: [54] - [65], [92]  The Court found the parties had a loose, consensual arrangement whose terms were implied: [66]  The XCs claimed their deposit and the unpaid “non payments” for motel work; a total of ~$105K. The Court found no reason existed for payment not to be made and the XCs succeeded in their claim: [86]  The XDs claimed (among other things) ~$240K of payments made through the EFTPOS machine. There was no conclusive evidence about which payments related to the motel and which related to 1XC’s other business (noting sometimes guests would stay at 1XD’s premises if the motel was full). The Court considered the most fair outcome was to award around half the amount claimed to the XDs: [95] - [102]  A number of other small claims brought by the XDs failed, including because no fiduciary obligations arose between the parties: [103] - [112]  Orders were made that the XCs pay the XDs $132K, and the XDs pay the XCs $105K - a difference of around $27K: [113]  The Court invited submissions on costs but suggested an appropriate order may be that each party bear their own costs.  Without wishing to be flippant or disrespectful, each party might also bear their own regrets about failing to document their arrangement.  ___  If you'd like to contact me please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!

"This motel ain't big enough for the both of us!" ___ Two families operated a motel together until their relationship deteriorated. 2XD owned the land the motel was operated on and leased it to 1XD, a Co co-owned by 2XD: [2] 2XC had assisted 2XD over the years, and came to assist with the motel: [13] - [17] The arrangements (for 2XC to help at the motel, and to eventually purchase it from 2XD having paid a deposit) were informal and legally unclear - an arrangement defined by “uncertainty, if not confusion”: [24] 1XC (who was in a domestic partnership with 2XC) ran a separate business providing accomodation among other things. After a time 1XC obtained an EFTPOS machine to accept payments: [37] - [41] 2XD stopped payments to the XCs for their work at the motel, apparently planning to set those “non payments” against an eventual purchase price: [42] Sometimes the 2XC used the EFTPOS machine for motel payments: [44] This diverted funds away from the XDs’ motel bank account: [46] In early 2020, 2XD decided they did not want to proceed with the sale: [47] In around July 2020, the XDs forcibly evicted the XCs and commenced legal proceedings: [48], [49] The dispute crystallised into arguments which parties owed what money, and why: [51] Complexity arose from the messiness of the legal relationship: [52] The XCs were not employees, nor did they have an “equitable lease”, nor were they agents, nor did any equitable relationship arise: [54] - [65], [92] The Court found the parties had a loose, consensual arrangement whose terms were implied: [66] The XCs claimed their deposit and the unpaid “non payments” for motel work; a total of ~$105K. The Court found no reason existed for payment not to be made and the XCs succeeded in their claim: [86] The XDs claimed (among other things) ~$240K of payments made through the EFTPOS machine. There was no conclusive evidence about which payments related to the motel and which related to 1XC’s other business (noting sometimes guests would stay at 1XD’s premises if the motel was full). The Court considered the most fair outcome was to award around half the amount claimed to the XDs: [95] - [102] A number of other small claims brought by the XDs failed, including because no fiduciary obligations arose between the parties: [103] - [112] Orders were made that the XCs pay the XDs $132K, and the XDs pay the XCs $105K - a difference of around $27K: [113] The Court invited submissions on costs but suggested an appropriate order may be that each party bear their own costs. Without wishing to be flippant or disrespectful, each party might also bear their own regrets about failing to document their arrangement. ___ If you'd like to contact me please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!

Forza Marketing Pty Ltd v Sie [2023] NSWSC 658

“Those unjust terms are void, but not the whole contract.”___A Co borrowed money. The Co’s dir and that dir’s spouse (together, “the Ps”) guaranteed the Co’s borrowing including by mortgage: [4]The Ps said the contract was unjust pursuant to the Contracts Review Act 1980 (NSW): [6]The Co borrowed ~$9m from the D on a 15 month term with ~$1m immediately payable to the D: [7]On default a higher interest rate would be payable, even after the default was remedied: [15], [16]A “hefty fee” - 5% of the ~$9m - could be charged by D in the case of *potential* default even for some circs the Ps and the Co could not control: [17], [18], [55]A contract (unless it’s commercial, which this was not for the Ps) can be unjust due to its contractual operation (“substantive injustice”) or due to the way it was entered into (“procedural injustice”): [26], [33]Through the prep of the contract, changes requested by the Ps were ignored: [38], [39]The contract was not negotiated. The Ps’ 1st lawyer did not read it. The Ps’ 2nd lawyer was engaged so late they could only advise, not propose changes: [40]This in part arose from D’s insistence at the last minute that the Ps change lawyers, having threatened not to continue with the deal if the 1st lawyers remained - an “unfair” tactic with “no good reason”: [42], [66]The P who was a dir of the Co knew the D’s proposed term was likely too short for the development to be completed: [46]The Ps had poor English skills and no experience with finance and property development. D was aware of this: [56] - [58], [71]Independent legal advice was obtained, though in English with no interpreter: [60]It is likely the Ps understood some of the legal impacts of the agreement, though likely not all of it without a translator: [62] - [65]It was foreseeable that the Co would default (as the loan term was shorter than needed to finish building) and it was foreseeable that problems would emerge as a result: [68]There was inequality in bargaining power between the Ps and D; and with the D’s added time pressure, no time to negotiate amendments or seek a translator’s help. D was aware of these issues: [69]The Court did not find that the entire agreement itself was unjust; merely the “continuing” default interest rate and the “hefty fee”: [74]The Court declared those terms void: [79] favourite

“Those unjust terms are void, but not the whole contract.” ___ A Co borrowed money. The Co’s dir and that dir’s spouse (together, “the Ps”) guaranteed the Co’s borrowing including by mortgage: [4] The Ps said the contract was unjust pursuant to the Contracts Review Act 1980 (NSW): [6] The Co borrowed ~$9m from the D on a 15 month term with ~$1m immediately payable to the D: [7] On default a higher interest rate would be payable, even after the default was remedied: [15], [16] A “hefty fee” - 5% of the ~$9m - could be charged by D in the case of *potential* default even for some circs the Ps and the Co could not control: [17], [18], [55] A contract (unless it’s commercial, which this was not for the Ps) can be unjust due to its contractual operation (“substantive injustice”) or due to the way it was entered into (“procedural injustice”): [26], [33] Through the prep of the contract, changes requested by the Ps were ignored: [38], [39] The contract was not negotiated. The Ps’ 1st lawyer did not read it. The Ps’ 2nd lawyer was engaged so late they could only advise, not propose changes: [40] This in part arose from D’s insistence at the last minute that the Ps change lawyers, having threatened not to continue with the deal if the 1st lawyers remained - an “unfair” tactic with “no good reason”: [42], [66] The P who was a dir of the Co knew the D’s proposed term was likely too short for the development to be completed: [46] The Ps had poor English skills and no experience with finance and property development. D was aware of this: [56] - [58], [71] Independent legal advice was obtained, though in English with no interpreter: [60] It is likely the Ps understood some of the legal impacts of the agreement, though likely not all of it without a translator: [62] - [65] It was foreseeable that the Co would default (as the loan term was shorter than needed to finish building) and it was foreseeable that problems would emerge as a result: [68] There was inequality in bargaining power between the Ps and D; and with the D’s added time pressure, no time to negotiate amendments or seek a translator’s help. D was aware of these issues: [69] The Court did not find that the entire agreement itself was unjust; merely the “continuing” default interest rate and the “hefty fee”: [74] The Court declared those terms void: [79] favourite

Hoho Property v Bass Finance No 37 (No 2) [2023] NSWSC 493

“You can’t bring your derivative suit; an oppression claim does that job!”___Ps, shareholders in a Co that produced fire collars and similar products for the building industry, sought leave to bring derivative proceedings on behalf of the Co.The relevant IP for the Co was held in a unit trust with TCo as trustee.Each of the Ps and the Ds were shareholders in Co and TCo, and unitholders in the trust: [2]The Ds were directors of Co and TCo.The relationship between the parties began to deteriorate from around 2014, when P1’s employment by the Co was terminated. From around this time the Ps wanted to sell their shares: [3]First, the Ps said the Ds caused an improper capital raising by TCo, who then purchased and licensed back some of the Co’s assets. The Ps said this arrangement was on uncommercial terms with the impact of diluting the Ps’ interests: [6]Second, the Ps said the Ds founded NewCo, and caused the Co to supply NewCo with products NewCo would then sell overseas at a profit. The Ps say the Ds caused the Co to provide services to NewCo on terms not beneficial to the Co: [7]The Ps wanted leave to bring a suit chasing the Ds including for breaching their contract with the Co and breaching their duties to the Co. They brought additional claims including pursuant to s233 of the CA: [8]The Ps said their derivative claims were “strong”, and would be pursued at no cost to the Co as the Ps would fund and indemnify the Co for any costs order. The Court noted the oppression claim would be brought in any case: [14]The real debate surrounded whether the derivative suit was in the best interests of the Co: [15]For leave to be granted the Court must be satisfied it *is* in the Co’s best interests that leave be granted; not that it could be or is likely to be: [17]The Court noted it needed to consider whether the Ps could obtain relief from means other than forcing the Co to litigate against its will: [19]While not determinative the Ps’ Statement of Claim revealed the dispute was really one between shareholders, and another means of achieving a similar result to the derivative suit is the oppression proceedings: [20]The Court noted authority that the alleged breaches of duty could be accounted for in the valuation of the Ps’ shares in any buyout relief that might be available in the oppression claim: [22]The Court did not grant the Ps leave to bring a derivative suit: [24]The Court considered it was not in the best interest of the Co for a derivative suit to be brought where similar relief could be obtained by Ps by other means, and without involving the Co in litigation. It was not shown by Ps that the oppression relief would be inadequate: [23] ___ And please look out for James d'Apice and Coffee and a Case Note on your favourite platform!

“You can’t bring your derivative suit; an oppression claim does that job!” ___ Ps, shareholders in a Co that produced fire collars and similar products for the building industry, sought leave to bring derivative proceedings on behalf of the Co. The relevant IP for the Co was held in a unit trust with TCo as trustee. Each of the Ps and the Ds were shareholders in Co and TCo, and unitholders in the trust: [2] The Ds were directors of Co and TCo. The relationship between the parties began to deteriorate from around 2014, when P1’s employment by the Co was terminated. From around this time the Ps wanted to sell their shares: [3] First, the Ps said the Ds caused an improper capital raising by TCo, who then purchased and licensed back some of the Co’s assets. The Ps said this arrangement was on uncommercial terms with the impact of diluting the Ps’ interests: [6] Second, the Ps said the Ds founded NewCo, and caused the Co to supply NewCo with products NewCo would then sell overseas at a profit. The Ps say the Ds caused the Co to provide services to NewCo on terms not beneficial to the Co: [7] The Ps wanted leave to bring a suit chasing the Ds including for breaching their contract with the Co and breaching their duties to the Co. They brought additional claims including pursuant to s233 of the CA: [8] The Ps said their derivative claims were “strong”, and would be pursued at no cost to the Co as the Ps would fund and indemnify the Co for any costs order. The Court noted the oppression claim would be brought in any case: [14] The real debate surrounded whether the derivative suit was in the best interests of the Co: [15] For leave to be granted the Court must be satisfied it *is* in the Co’s best interests that leave be granted; not that it could be or is likely to be: [17] The Court noted it needed to consider whether the Ps could obtain relief from means other than forcing the Co to litigate against its will: [19] While not determinative the Ps’ Statement of Claim revealed the dispute was really one between shareholders, and another means of achieving a similar result to the derivative suit is the oppression proceedings: [20] The Court noted authority that the alleged breaches of duty could be accounted for in the valuation of the Ps’ shares in any buyout relief that might be available in the oppression claim: [22] The Court did not grant the Ps leave to bring a derivative suit: [24] The Court considered it was not in the best interest of the Co for a derivative suit to be brought where similar relief could be obtained by Ps by other means, and without involving the Co in litigation. It was not shown by Ps that the oppression relief would be inadequate: [23] ___ And please look out for James d'Apice and Coffee and a Case Note on your favourite platform!

Cooke & Ors v Denovan & Ors [2023] QSC 93

“You can have their shares, even though they’re worth nothing!”___P commenced oppression proceedings seeking buyout orders, or a windup.Co1 was owned 50-50 between P and D2, and bought a site for $4.6m: [4]Co2 was owned 50-50 between P and D2, and bought a site for $2.9m: [5]P said they contributed $1.3m to finance and D1 and D2 ~$700K between themselves: [6] Further funds were also contributed to all Cos by both.Co3 was owned 50-50 between P and D2, and agreed to buy a site for $6.1m in future: [7]During the hearing P showed debts owed by Co1 needed urgent payment, revealing the Cos needed P to meet their debts: [24]D1 said D2, their spouse, was little more than a figurehead. D1 said that they operated in the Cos day to day: [31]D1 said P agreed to provide additional funding for the Cos’ projects without Ds needing to contribute: [33] - [37]The Court did not accept D1’s evidence, and D2 did not give evidence; the inference arising that it would not have assisted the Ds: [47]The parties did not record their arrangement: [48]P said the parties agreed to share the Cos’ expenses and profits 50-50: [51]Neither P nor D1 proved the agreement they said was made: [56], [60], [62]In late 2022, D1 instructed the Cos’ builders to stop work on the Cos’ projects, and stopped a finance application: [67]P said Ds’ failure to pay 50%, the purported termination of the alleged agreement, and the Ds instructing some construction and a finance application to cease were contrary to s232: [76]The Court found the Ds failure to contribute their 50% was enough to support either a buyout order or a winding up: [77]The breach of the alleged agreement was not seen as oppressive as the agreement was not proved as pleaded, nor was the ceasing of construction and finance: [77]The Ds also said, unsuccessfully: P caused inaccurate books to be prepared, and that P breached their directors duties. The Ds also said the relationship had broken down. This was made out, but not a defence to P’s claim: [78]The next issue was: should relief be a share sale or a winding up (noting that a buyout order can be made for no consideration)?: [79]P made various submissions in support of a buyout order: [79] - [85]The Ds accepted the relationship had broken down, but pressed for a winding up: [86]On balance, the Court found a buyout order was appropriate for Co1, Co2 and Co3: [99], [102]Noting the indebtedness of each of the Cos to P and the Ds, the value of each Co as nil making the value of the Ds shares in each Co nil: [80], [84], [104], [106]Having found buyout orders were appropriate, the Court did not need to consider P’s claim for a winding up: [107]Noting the nil value of the Ds’ shares, the Court ordered that P had to pay certain amounts into Court on account of the Cos’ debts to the Ds and, once paid, cause the transfer of the shares to P: [125]  ___  And please look out for James d'Apice and Coffee and Case Note on your favourite platform!

“You can have their shares, even though they’re worth nothing!” ___ P commenced oppression proceedings seeking buyout orders, or a windup. Co1 was owned 50-50 between P and D2, and bought a site for $4.6m: [4] Co2 was owned 50-50 between P and D2, and bought a site for $2.9m: [5] P said they contributed $1.3m to finance and D1 and D2 ~$700K between themselves: [6] Further funds were also contributed to all Cos by both. Co3 was owned 50-50 between P and D2, and agreed to buy a site for $6.1m in future: [7] During the hearing P showed debts owed by Co1 needed urgent payment, revealing the Cos needed P to meet their debts: [24] D1 said D2, their spouse, was little more than a figurehead. D1 said that they operated in the Cos day to day: [31] D1 said P agreed to provide additional funding for the Cos’ projects without Ds needing to contribute: [33] - [37] The Court did not accept D1’s evidence, and D2 did not give evidence; the inference arising that it would not have assisted the Ds: [47] The parties did not record their arrangement: [48] P said the parties agreed to share the Cos’ expenses and profits 50-50: [51] Neither P nor D1 proved the agreement they said was made: [56], [60], [62] In late 2022, D1 instructed the Cos’ builders to stop work on the Cos’ projects, and stopped a finance application: [67] P said Ds’ failure to pay 50%, the purported termination of the alleged agreement, and the Ds instructing some construction and a finance application to cease were contrary to s232: [76] The Court found the Ds failure to contribute their 50% was enough to support either a buyout order or a winding up: [77] The breach of the alleged agreement was not seen as oppressive as the agreement was not proved as pleaded, nor was the ceasing of construction and finance: [77] The Ds also said, unsuccessfully: P caused inaccurate books to be prepared, and that P breached their directors duties. The Ds also said the relationship had broken down. This was made out, but not a defence to P’s claim: [78] The next issue was: should relief be a share sale or a winding up (noting that a buyout order can be made for no consideration)?: [79] P made various submissions in support of a buyout order: [79] - [85] The Ds accepted the relationship had broken down, but pressed for a winding up: [86] On balance, the Court found a buyout order was appropriate for Co1, Co2 and Co3: [99], [102] Noting the indebtedness of each of the Cos to P and the Ds, the value of each Co as nil making the value of the Ds shares in each Co nil: [80], [84], [104], [106] Having found buyout orders were appropriate, the Court did not need to consider P’s claim for a winding up: [107] Noting the nil value of the Ds’ shares, the Court ordered that P had to pay certain amounts into Court on account of the Cos’ debts to the Ds and, once paid, cause the transfer of the shares to P: [125] ___ And please look out for James d'Apice and Coffee and Case Note on your favourite platform!

SRD Property Pty Limited [2023] NSWSC 441

“Is the whole group a partnership, and can we dissolve it?”___In the 1950s 3 brothers started a business which became successful. It was run as a group of Cos and trusts that grew in value and complexity.The group was run informally by the 3 brothers (and later their kids) and structured pursuant to tax advice: [20] In 2018 P sued seeking to divide the business into 3 equal parts; each part passing to each brother’s family or estate.The Court accepted the relationships broke down for “unclear and complicated” reasons including issues with a parcel of land allegedly owned by P and issues with the new generation running the group: [41] - [50], [126], [154]P said the group was operated by an “overarching” partnership; saying the group had many of the attributes of a partnership (run by 3 bros, profit share etc.): [82], [101]However, the group’s underlying assets were held on trust. A partnership can be a beneficiary of a trust, but not a legal owner of assets held on trust: [95]Fatal to P’s claim: if a receiver was appointed to the “partnership” what could that receiver do about the assets held on trust? Nothing outside of the trust deeds’ bounds: [97]P alleged parts of the group was a “sub-partnership” between the brothers’ spouses. However, the spouses were trustees, not partners: [98], [99]The group was found to be an “overarching” partnership: [101]P then said the group should be wound up on the just and equitable grounds: [103]In 2017 one brother died, his child then representing his interests. Negotiations to divide the group were conducted and failed. This litigation was commenced. Together this showed the group could not return to its state when run by all 3 brothers: [115]However the appropriate question re s461 is whether *each company* (many of which were trustees) should be wound up. Ps did not make submissions on each company: [119]No suggestion was made that each Tee company was failing in its obligations with no suggestions trust assets were in jeopardy: [120], [121], [132]In the absence of this evidence and submissions, it was not for the Court to try to find a basis for a s461 order: [124]P sought the dissolution of the trusts in the group, but the only basis for that would be bringing forward each one’s vesting date. In the absence of hearing from the beneficiaries the falling out between the brothers was not a basis for the Court to direct the trustees to so exercise their powers: [139]P was not itself a party to the partnerships in the group and so could not dissolve them: [146]The Court considered its conclusions “could not be regarded as a satisfactory resolution of the case”: [154]The Court found that the brothers, having chosen this structure in large part for tax effectiveness, must now live with the consequences and sought submissions on next steps: [155], [158]  d'Apice and Coffee and a Case Note on your favourite platforms

“Is the whole group a partnership, and can we dissolve it?” ___ In the 1950s 3 brothers started a business which became successful. It was run as a group of Cos and trusts that grew in value and complexity. The group was run informally by the 3 brothers (and later their kids) and structured pursuant to tax advice: [20]  In 2018 P sued seeking to divide the business into 3 equal parts; each part passing to each brother’s family or estate. The Court accepted the relationships broke down for “unclear and complicated” reasons including issues with a parcel of land allegedly owned by P and issues with the new generation running the group: [41] - [50], [126], [154] P said the group was operated by an “overarching” partnership; saying the group had many of the attributes of a partnership (run by 3 bros, profit share etc.): [82], [101] However, the group’s underlying assets were held on trust. A partnership can be a beneficiary of a trust, but not a legal owner of assets held on trust: [95] Fatal to P’s claim: if a receiver was appointed to the “partnership” what could that receiver do about the assets held on trust? Nothing outside of the trust deeds’ bounds: [97] P alleged parts of the group was a “sub-partnership” between the brothers’ spouses. However, the spouses were trustees, not partners: [98], [99] The group was found to be an “overarching” partnership: [101] P then said the group should be wound up on the just and equitable grounds: [103] In 2017 one brother died, his child then representing his interests. Negotiations to divide the group were conducted and failed. This litigation was commenced. Together this showed the group could not return to its state when run by all 3 brothers: [115] However the appropriate question re s461 is whether *each company* (many of which were trustees) should be wound up. Ps did not make submissions on each company: [119] No suggestion was made that each Tee company was failing in its obligations with no suggestions trust assets were in jeopardy: [120], [121], [132] In the absence of this evidence and submissions, it was not for the Court to try to find a basis for a s461 order: [124] P sought the dissolution of the trusts in the group, but the only basis for that would be bringing forward each one’s vesting date. In the absence of hearing from the beneficiaries the falling out between the brothers was not a basis for the Court to direct the trustees to so exercise their powers: [139] P was not itself a party to the partnerships in the group and so could not dissolve them: [146] The Court considered its conclusions “could not be regarded as a satisfactory resolution of the case”: [154] The Court found that the brothers, having chosen this structure in large part for tax effectiveness, must now live with the consequences and sought submissions on next steps: [155], [158] d'Apice and Coffee and a Case Note on your favourite platforms

Mir v Mir [2023] NSWSC 408

“It’s not unreasonable that I rejected your offer!”___A dispute arose about how much tax a Co should have to pay.The dispute related to P’s alleged status as an employment agent: [22], [24]As the matter progressed P made a partial payment in respect of the claimed tax debt and litigation was commenced.In January 2021 D made a Calderbank offer (and not a UCPR offer) to accept about $3.4m for its claim (when it alleged $5.2m was owed): [9]The matter did not settle.In the end, in February 2023 P was ordered to pay P $4.2m: [10]P enjoyed partial success at first instance. Due to P’s partial success, at first instance D was ordered to pay 50% of P’s legal costs: [3], [4]D appealed including seeking to displace its costs obligation: [8]D said that if the Jan 2021 offer had been accepted P would have been $800K better off, so rejecting that offer was unreasonable.D further said P was unreasonable in not accepting the offer because: (1) it was made 3 weeks before the first instance hearing, (2) it was open for 14 days, (3) it involved a compromise of $1.8m, (4) it was clear, (5) an indemnity costs order was flagged, and (6) P had all the evidence needed to assess its position: [13]Reasonableness is to be assessed at the date the offer is made, not with hindsight: [15]P said a significant amount of the final sum it was ordered to pay was interest accruing due to matters outside its control including D’s conduct by appealing on the last possible day and amending its appeal grounds, and the appeal being partly heard with a subsequent 3 month delay for a second hearing day: [16]The Court accepted the offer was not a compromise in primary tax, only interest - and that interest was largely due to D’s conduct of the appeal including raising of new grounds: [19]Considering the reasonableness of P’s response to the offer should bear in mind each party’s exposure regarding interest i.e. while D might be owed interest if it won, P might have been owed interest on its pre-payment if it had won: [20]D eventually won on appeal, but that victory was attributable to a point not given much attention at first instance, and not mentioned in the offer: [22] - [24]It was not unreasonable for P not to accept the offer. The existing cost order was appropriate. D should pay P’s costs of the application to vary the costs orders: [25] ___ If you'd like to contact me please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!  #coffeeandacasenote​​​​​​​​ #auslaw​​​​​​​​

“It’s not unreasonable that I rejected your offer!” ___ A dispute arose about how much tax a Co should have to pay. The dispute related to P’s alleged status as an employment agent: [22], [24] As the matter progressed P made a partial payment in respect of the claimed tax debt and litigation was commenced. In January 2021 D made a Calderbank offer (and not a UCPR offer) to accept about $3.4m for its claim (when it alleged $5.2m was owed): [9] The matter did not settle. In the end, in February 2023 P was ordered to pay P $4.2m: [10] P enjoyed partial success at first instance. Due to P’s partial success, at first instance D was ordered to pay 50% of P’s legal costs: [3], [4] D appealed including seeking to displace its costs obligation: [8] D said that if the Jan 2021 offer had been accepted P would have been $800K better off, so rejecting that offer was unreasonable. D further said P was unreasonable in not accepting the offer because: (1) it was made 3 weeks before the first instance hearing, (2) it was open for 14 days, (3) it involved a compromise of $1.8m, (4) it was clear, (5) an indemnity costs order was flagged, and (6) P had all the evidence needed to assess its position: [13] Reasonableness is to be assessed at the date the offer is made, not with hindsight: [15] P said a significant amount of the final sum it was ordered to pay was interest accruing due to matters outside its control including D’s conduct by appealing on the last possible day and amending its appeal grounds, and the appeal being partly heard with a subsequent 3 month delay for a second hearing day: [16] The Court accepted the offer was not a compromise in primary tax, only interest - and that interest was largely due to D’s conduct of the appeal including raising of new grounds: [19] Considering the reasonableness of P’s response to the offer should bear in mind each party’s exposure regarding interest i.e. while D might be owed interest if it won, P might have been owed interest on its pre-payment if it had won: [20] D eventually won on appeal, but that victory was attributable to a point not given much attention at first instance, and not mentioned in the offer: [22] - [24] It was not unreasonable for P not to accept the offer. The existing cost order was appropriate. D should pay P’s costs of the application to vary the costs orders: [25] ___ If you'd like to contact me please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away! <a href="https://www.youtube.com/hashtag/coffeeandacasenote" rel="nofollow" target="_blank">#coffeeandacasenote​​​​​​​​</a><a href="https://www.youtube.com/hashtag/auslaw" rel="nofollow" target="_blank"> #auslaw​​​​​​​​</a>

Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 3) [2023] NSWCA 63

“Money down; then you can sue me!”___P sued the Ds for $4m claiming it was an unpaid builders margin: [1]The Ds sought security for their costs: [2]In 2018 P worked on 2 projects for some Ds, with the Ds’ Dir expressing interest in buying shares in P despite a dropping margin: [7]Later in 2018 some of the Ds entered into the shareholders deed. One of the Ds became a 50% shareholder in P and P was entitled to charge an 8% margin on costs for construction work done for the Ds: [8] - [10]In 2019 P began construction work and issued D invoices for costs plus 8%: [12]The Dirs of P and the Ds incorporated NewCo to do building work. There was some complexity as to whether NewCo charged a margin or was entitled to: [13] - [18]The Dirs of P and the Ds incorporated NewerCo which, in a complicated arrangement, also purported to do building work for the Ds: [22] - [25]In 2022, the Dirs of P and the Ds agreed to part ways: [26] - [30]P then rendered an invoice to the Ds for 8% of the cost of works performed by P, NewCo, NewerCo and related entities: [31]After settlement negotiations failed, and the making of SOPA payment claims, P commenced proceedings in August 2022: [32] - [39]The Ds sought financial information from P: [44]P provided a P and L and said on the assumption its invoices were paid, it was profitable: [44]P represented that it had tendered successfully for a $20m job, but it appeared that may have been a party related to the P: [45]The Ds sought security for their costs: [46]P resisted the application. It said its prospects were strong based on credit findings it said would be made about the Ds’ business practices at final hearing: [50]P said the Ds’ Dir sent emails requesting invoices be re-issued to refer to other developments, and that contracts were backdated: [51], [52]The Court said these issues were peripheral to P’s central claim that came from the “complex and changeable” contractual environment: [53]The Court found that even if the credit finding contended for were made, it was not clear how that would affect the parties’ contractual relationship: [54]Regarding finances, P said it was $1.4m in deficit. If the $4m claimed was paid its position would stabilise: [56]The Ds said the claims were claims of other entities related to P, and not P themselves. That meant that P’s prospects were not as strong as claimed and, even if the claims succeeded, the money would not necessarily revert to the P: [57] - [61]The Court considered whether an order for security for costs would stifle the proceedings.To prove this, P had to prove neither it, nor those who stood to benefit from the litigation, could provide security. Including due to insufficient evidence about the beneficiaries of a relevant trust, P failed to meet this test: [63] - [71]The Court ordered that P should provide D with $250K security for their costs, and for it to have its costs of this application: [79]   JamesCoffeefavourite

“Money down; then you can sue me!” ___ P sued the Ds for $4m claiming it was an unpaid builders margin: [1] The Ds sought security for their costs: [2] In 2018 P worked on 2 projects for some Ds, with the Ds’ Dir expressing interest in buying shares in P despite a dropping margin: [7] Later in 2018 some of the Ds entered into the shareholders deed. One of the Ds became a 50% shareholder in P and P was entitled to charge an 8% margin on costs for construction work done for the Ds: [8] - [10] In 2019 P began construction work and issued D invoices for costs plus 8%: [12] The Dirs of P and the Ds incorporated NewCo to do building work. There was some complexity as to whether NewCo charged a margin or was entitled to: [13] - [18] The Dirs of P and the Ds incorporated NewerCo which, in a complicated arrangement, also purported to do building work for the Ds: [22] - [25] In 2022, the Dirs of P and the Ds agreed to part ways: [26] - [30] P then rendered an invoice to the Ds for 8% of the cost of works performed by P, NewCo, NewerCo and related entities: [31] After settlement negotiations failed, and the making of SOPA payment claims, P commenced proceedings in August 2022: [32] - [39] The Ds sought financial information from P: [44] P provided a P and L and said on the assumption its invoices were paid, it was profitable: [44] P represented that it had tendered successfully for a $20m job, but it appeared that may have been a party related to the P: [45] The Ds sought security for their costs: [46] P resisted the application. It said its prospects were strong based on credit findings it said would be made about the Ds’ business practices at final hearing: [50] P said the Ds’ Dir sent emails requesting invoices be re-issued to refer to other developments, and that contracts were backdated: [51], [52] The Court said these issues were peripheral to P’s central claim that came from the “complex and changeable” contractual environment: [53] The Court found that even if the credit finding contended for were made, it was not clear how that would affect the parties’ contractual relationship: [54] Regarding finances, P said it was $1.4m in deficit. If the $4m claimed was paid its position would stabilise: [56] The Ds said the claims were claims of other entities related to P, and not P themselves. That meant that P’s prospects were not as strong as claimed and, even if the claims succeeded, the money would not necessarily revert to the P: [57] - [61] The Court considered whether an order for security for costs would stifle the proceedings. To prove this, P had to prove neither it, nor those who stood to benefit from the litigation, could provide security. Including due to insufficient evidence about the beneficiaries of a relevant trust, P failed to meet this test: [63] - [71] The Court ordered that P should provide D with $250K security for their costs, and for it to have its costs of this application: [79] James Coffee favourite

TC Build Pty Ltd v STM123 Pty Ltd [2023] NSWSC 322

I’m Australian lawyer, James d’Apice. Coffee and a Case Note began as a video series where I sip a coffee and chat about recent legal cases. This is the audio version! I hope it brings you value.

“Nope! The injunction stays and you’re still restrained.”___P was a member of an international group of leasing businesses. D was a former employee of P’s.Commencing in 2016, over time D had been promoted, signing a number of new employment agreements: [4]The most recent contract included a 3 month notice period and an extended restraint. D gave evidence they did not read the agreement before signing, instead relying on emails exchanged at the time: [7], [8]In Feb 2023, D resigned purporting to give 4 weeks notice: [9]After D left employment, P was granted an injunction restraining D from competing with P for a period: [2]D entered into an employment agreement with a competing property business purporting to commence in March 2023: [12]D’s resignation was a repudiation that P could accept and terminate, or otherwise keep on foot. P kept the contract on foot: [13]The “garden leave” requirements that P said remained on foot were indeed restraints of trade: [13]In early March P got an injunction preventing D from working for their new employer: [15]D sought to discharge the injunction: [16]P had to show the restraint was reasonably necessary to protect its legitimate interests, and otherwise compliant with the NSW legislation: [20] - [22]D said they were not bound by the 3 month notice period as they had not read the document (legally immaterial where a person has signed a document known by them to include contractual terms): [25]P said D had developed personal relationships, had access to confidential information like tenders and pricing, and may take 12 months to properly replace: [28]D said head hunting was common among the small industry and the restraint was unnecessary: [30]P established a serious question to be tried due to (i) D’s senior status and personal relationships, (ii) that (at least) 3 months might be needed to onboard a replacement for D, and (iii) P had a legitimate interest in protecting the confidential information D was aware of: [31] - [33]Noting D’s role with P there was a risk damages were not an appropriate remedy: [35]While D might face some financial risk, P undertook to continue paying their salary, nor was there evidence that D’s signon bonus was at risk: [36], [37]That protected D’s position: [42]D “was the author of (their) own misfortunes” by entering into an arrangement with a new employer in breach of their previous obligations: [40]The balance of convenience favoured the maintenance of the injunction: [43]The application to dismiss the injunction failed. D remained bound by it: [45]

“Nope! The injunction stays and you’re still restrained.” ___ P was a member of an international group of leasing businesses. D was a former employee of P’s. Commencing in 2016, over time D had been promoted, signing a number of new employment agreements: [4] The most recent contract included a 3 month notice period and an extended restraint. D gave evidence they did not read the agreement before signing, instead relying on emails exchanged at the time: [7], [8] In Feb 2023, D resigned purporting to give 4 weeks notice: [9] After D left employment, P was granted an injunction restraining D from competing with P for a period: [2] D entered into an employment agreement with a competing property business purporting to commence in March 2023: [12] D’s resignation was a repudiation that P could accept and terminate, or otherwise keep on foot. P kept the contract on foot: [13] The “garden leave” requirements that P said remained on foot were indeed restraints of trade: [13] In early March P got an injunction preventing D from working for their new employer: [15] D sought to discharge the injunction: [16] P had to show the restraint was reasonably necessary to protect its legitimate interests, and otherwise compliant with the NSW legislation: [20] - [22] D said they were not bound by the 3 month notice period as they had not read the document (legally immaterial where a person has signed a document known by them to include contractual terms): [25] P said D had developed personal relationships, had access to confidential information like tenders and pricing, and may take 12 months to properly replace: [28] D said head hunting was common among the small industry and the restraint was unnecessary: [30] P established a serious question to be tried due to (i) D’s senior status and personal relationships, (ii) that (at least) 3 months might be needed to onboard a replacement for D, and (iii) P had a legitimate interest in protecting the confidential information D was aware of: [31] - [33] Noting D’s role with P there was a risk damages were not an appropriate remedy: [35] While D might face some financial risk, P undertook to continue paying their salary, nor was there evidence that D’s signon bonus was at risk: [36], [37] That protected D’s position: [42] D “was the author of (their) own misfortunes” by entering into an arrangement with a new employer in breach of their previous obligations: [40] The balance of convenience favoured the maintenance of the injunction: [43] The application to dismiss the injunction failed. D remained bound by it: [45]

Cushman & Wakefield Agency (NSW) Pty Ltd v Hudson [2023] NSWSC 218

“But our relationship hasn’t broken down!”___C1 and C2 did development work together.Two natural persons, P and D, were inter alia (i) equal shareholders in C1 and C2, and (ii) dirs of C2. D was the sole dir of C1: [1] P brought an application pursuant to s233 and s461 to wind up C1 and C2: [2]Originally, D had borrowed money from P’s parent for the venture. P’s parent only agreed so P could learn the property development business in a quasi-partnership venture, built on trust: [4], [54]Various loans between the entities, and P’s parent, were made for C2 to purchase properties for development: [9]Over time, P’s spouse became involved: [11] - [15]P took a passive role in the venture: [53]P alleged D caused over $3m in improper transfers from C1’s accounts: [59] - [61]D returned a significant amount of that sum: [62] - [64]Evidence suggested D “parked” some of C1’s money in D’s own offset accounts to reduce D’s interest payments, and bought a car without permission: [66], [67], [70], [81]D diverted funds of C1 that could have been used to pay its debts and made other payments with a lack of transparency; apparently a breach fo DDs, as well as sufficient to enliven both s461 and s232: [75]The breakdown in relations was shown by increasingly toxic WeChat exchanges: [90] - [93]The lack of trust stymied further development opportunities, but D said suggestions of a breakdown in relations were exaggerated: [98], [99]C1 and C2 had not prepared financial statements from 2018 with no explanation: [107]D blamed P’s spouse for not providing the supporting documents needed: [101] - [104]Breaches of DDs and inadequate accounts can be sufficient to wind up a Co on the just and equitable basis: [109]C1 and C2 also failed to comply with their tax obligations or pay their debts; likely a breach of D’s DDs and sufficient to ground an s461 order: [110], [116], [122]The failure by C2 to resist a VCAT claim against it is further evidence of deadlock between the parties: [128]The lack of records made it difficult for the Court to understand the Cos’ position. It appeared at least one insolvency test might be met: [129], [133]To the extent that D raised transactions P engaged in that might have been improper, the Court considered a liquidator would be well placed to pursue these: [154]The erosion of trust and confidence meant it would be just and equitable to wind the Cos up (s461) and that the Cos’ conduct was relevantly unfair (s232): [159] - [161]The status quo was “wholly unsatisfactory” and the existing problems - tax debt, poor record keeping and governance - were likely to worsen. Independent liquidation was therefore attractive: [166]There was no alternative remedy and so the Court ordered that C1 and C2 be liquidated: [167] - [177]

“But our relationship hasn’t broken down!” ___ C1 and C2 did development work together. Two natural persons, P and D, were inter alia (i) equal shareholders in C1 and C2, and (ii) dirs of C2. D was the sole dir of C1: [1]  P brought an application pursuant to s233 and s461 to wind up C1 and C2: [2] Originally, D had borrowed money from P’s parent for the venture. P’s parent only agreed so P could learn the property development business in a quasi-partnership venture, built on trust: [4], [54] Various loans between the entities, and P’s parent, were made for C2 to purchase properties for development: [9] Over time, P’s spouse became involved: [11] - [15] P took a passive role in the venture: [53] P alleged D caused over $3m in improper transfers from C1’s accounts: [59] - [61] D returned a significant amount of that sum: [62] - [64] Evidence suggested D “parked” some of C1’s money in D’s own offset accounts to reduce D’s interest payments, and bought a car without permission: [66], [67], [70], [81] D diverted funds of C1 that could have been used to pay its debts and made other payments with a lack of transparency; apparently a breach fo DDs, as well as sufficient to enliven both s461 and s232: [75] The breakdown in relations was shown by increasingly toxic WeChat exchanges: [90] - [93] The lack of trust stymied further development opportunities, but D said suggestions of a breakdown in relations were exaggerated: [98], [99] C1 and C2 had not prepared financial statements from 2018 with no explanation: [107] D blamed P’s spouse for not providing the supporting documents needed: [101] - [104] Breaches of DDs and inadequate accounts can be sufficient to wind up a Co on the just and equitable basis: [109] C1 and C2 also failed to comply with their tax obligations or pay their debts; likely a breach of D’s DDs and sufficient to ground an s461 order: [110], [116], [122] The failure by C2 to resist a VCAT claim against it is further evidence of deadlock between the parties: [128] The lack of records made it difficult for the Court to understand the Cos’ position. It appeared at least one insolvency test might be met: [129], [133] To the extent that D raised transactions P engaged in that might have been improper, the Court considered a liquidator would be well placed to pursue these: [154] The erosion of trust and confidence meant it would be just and equitable to wind the Cos up (s461) and that the Cos’ conduct was relevantly unfair (s232): [159] - [161] The status quo was “wholly unsatisfactory” and the existing problems - tax debt, poor record keeping and governance - were likely to worsen. Independent liquidation was therefore attractive: [166] There was no alternative remedy and so the Court ordered that C1 and C2 be liquidated: [167] - [177]

Re Dawning Investments Pty Ltd [2022] VSC 641

James had the chance to sit down with the wonderful Rose Inglis for her Rose Tinted Law podcast the other week! James (me - I am just writing this and pretending we are a big team) probably revealed more personal stuff, and more TikTok beef stuff, here than ever before. Enjoy! And catch Rose here: https://rosetintedlaw.com.au/rtl-the-podcast

James had the chance to sit down with the wonderful Rose Inglis for her Rose Tinted Law podcast the other week! James (me - I am just writing this and pretending we are a big team) probably revealed more personal stuff, and more TikTok beef stuff, here than ever before. Enjoy! And catch Rose here: <a href="https://rosetintedlaw.com.au/rtl-the-podcast" rel="nofollow" target="_blank">https://rosetintedlaw.com.au/rtl-the-podcast</a>

James d'Apice interview with Rose Inglis March 2023 - Rose Tinted Law Podcast

“Nope. You can’t stand in the company’s shoes.”  ___  In a family dispute, P wanted the Court’s leave to pursue a $10m claim on behalf of Co. P said the $10m was owed by D1, trustee of a family trust, as a loan to be repaid: [2], [17]  P also sought leave to proceed against D2 and D3 for breaching their duties to Co: [3]  P said the loans were made where D1 had doubtful capacity to repay, and where interest was not charged: [4], [5]  At a 2021 meeting, the Co’s dirs (including an independent dir) considered the loan from D1 and resolved not to seek repayment at that time: [10], [21]  P gave an undertaking to pay Co’s costs if leave was granted, despite not having much money: [11]  A dispute regarding D3’s removal as trustee of a family trust lead to a far reaching settlement deed being entered into in 2019. That established Co’s corporate governance structure, including the independent director: [18]  There are a number of related pieces of litigation on foot between the parties: [24]  It was accepted by all that Co was not going to bring proceedings seeking repayment, or alleging breaches of duty: [27]  Whether P was acting in good faith in pressing a claim against D1 was considered in the context of P being a shareholder in Co, there being inconsistencies in P’s claim, and P’s offering of an indemnity of dubious value: [33], [34]  Whether P was acting in food faith in pressing the claims against D2 and D3 was assumed to be so but, later, found to be irrelevant as the claims raised no serious question to be tried: [39]  The Court was not satisfied that the claim was in the Co’s best interests. No financial evidence comparing alternatives was tendered, and the Court was reluctant to disturb the commercial judgement of the Co’s directors: [46], [47]  The Court noted the established corporate governance principle that directors could legitimately make decisions against the wishes of a majority of shareholders: [50]  It was found to be contrary to the Co’s best interests to “sidestep” or “outflank” the decision of Co’s board not to pursue the debt now, especially as no challenge was raised to the decision making process used: [53], [54]  Was it in the best interests of the Co *for P* to bring the claim? No, due to the existing family tensions and possible inability of P to separate P’s interests from his own, and the fact P did not propose instructing independent lawyers if leave was granted: [56]  As the claim was not brought in good faith or in the Co’s best interests, P was not granted leave to pursue Co’s claim against D1: [63]  Nor were the claims against D2 and D3 seriously arguable. P’s claim was poorly pleaded and contradictory in part - whether the loan would or would not be repaid, whether it was currently statute-barred or not: [64], [65], [71], [72]  P’s application was dismissed: [83]

“Nope. You can’t stand in the company’s shoes.” ___ In a family dispute, P wanted the Court’s leave to pursue a $10m claim on behalf of Co. P said the $10m was owed by D1, trustee of a family trust, as a loan to be repaid: [2], [17] P also sought leave to proceed against D2 and D3 for breaching their duties to Co: [3] P said the loans were made where D1 had doubtful capacity to repay, and where interest was not charged: [4], [5] At a 2021 meeting, the Co’s dirs (including an independent dir) considered the loan from D1 and resolved not to seek repayment at that time: [10], [21] P gave an undertaking to pay Co’s costs if leave was granted, despite not having much money: [11] A dispute regarding D3’s removal as trustee of a family trust lead to a far reaching settlement deed being entered into in 2019. That established Co’s corporate governance structure, including the independent director: [18] There are a number of related pieces of litigation on foot between the parties: [24] It was accepted by all that Co was not going to bring proceedings seeking repayment, or alleging breaches of duty: [27] Whether P was acting in good faith in pressing a claim against D1 was considered in the context of P being a shareholder in Co, there being inconsistencies in P’s claim, and P’s offering of an indemnity of dubious value: [33], [34] Whether P was acting in food faith in pressing the claims against D2 and D3 was assumed to be so but, later, found to be irrelevant as the claims raised no serious question to be tried: [39] The Court was not satisfied that the claim was in the Co’s best interests. No financial evidence comparing alternatives was tendered, and the Court was reluctant to disturb the commercial judgement of the Co’s directors: [46], [47] The Court noted the established corporate governance principle that directors could legitimately make decisions against the wishes of a majority of shareholders: [50] It was found to be contrary to the Co’s best interests to “sidestep” or “outflank” the decision of Co’s board not to pursue the debt now, especially as no challenge was raised to the decision making process used: [53], [54] Was it in the best interests of the Co *for P* to bring the claim? No, due to the existing family tensions and possible inability of P to separate P’s interests from his own, and the fact P did not propose instructing independent lawyers if leave was granted: [56] As the claim was not brought in good faith or in the Co’s best interests, P was not granted leave to pursue Co’s claim against D1: [63] Nor were the claims against D2 and D3 seriously arguable. P’s claim was poorly pleaded and contradictory in part - whether the loan would or would not be repaid, whether it was currently statute-barred or not: [64], [65], [71], [72] P’s application was dismissed: [83]

Wonga Pastoral Development Co Pty Ltd [2023] NSWSC 133

"Cancel the meeting you've set to remove me!" ___ An association relating to the education of First Nations people, D, planned to convene a meeting to consider removing its president, P. P applied to the Court on an urgent basis to restrain D from doing so: [1]  The meeting was set for a Sunday, P having been provided with very little notice. P approached the Court for an urgent hearing on the Friday beforehand, and the Court made the orders sought: [2]  The president said (i) the meeting was not called in accordance with D’s constitution, and (ii) for it to proceed would be to deny procedural fairness i.e. the chance to respond to criticism: [6]  The president had been involved in education for 40 years, was a life member of D, and had been elected president in 2021: [15]  P said that if their role as president was to end, they may need to reapply for their existing job, with a risk they might fail: [16], [42]  D’s work includes seeking, and then applying, funding. The evidence suggested P would argue that they deserved credit for $20m in funding for the association: [26]  Evidence suggested a power struggle and the passing of a motion of no confidence in P in December 2022: [28] – [30]  In January 2023, lawyers for the 8 other members of the management committee wrote to P setting out complaints and seeking a response: [31]  The complaints included complaints of misusing D’s funds: [32]  P denied the complaints: [38]  P was sick in hospital at the time of the hearing and would not recover in time to attend the meeting in any case: [43]  P satisfied the criteria for an interlocutory injunction: proving (i) there was a serious question to be tried and (ii) the balance of convenience favoured an injunction: [47]  The obligation of the association to afford P procedural fairness arose by inference: [49] – [51]  For the meeting to proceed would offend that requirement due to: P’s illness, the lack of particulars of the claims made, and the lack of time given to respond to the claims: [52] – [55]  As such, the Court found that a serious question arose: [58]  The Ds could not show any prejudice arose from the delay, the risk of the president incurring costs that were not reasonably identifiable was not apparent: [61]  P would likely suffer serious reputational loss if the meeting was to go ahead: [63]  Indeed, the D may suffer loss of funding for removing its president in circumstances where procedural fairness appears that it may have been denied. The external funding D relies on may be put at risk: [64]  P would almost certainly suffer financial loss if the meeting went ahead, where D would be unlikely to suffer loss: [65]  The balance of convenience was met and the injunction granted: [68], [71] ___ Please look out for Coffee and Case Note and James d'Apice on your favourite platform!

"Cancel the meeting you've set to remove me!" ___ An association relating to the education of First Nations people, D, planned to convene a meeting to consider removing its president, P. P applied to the Court on an urgent basis to restrain D from doing so: [1] The meeting was set for a Sunday, P having been provided with very little notice. P approached the Court for an urgent hearing on the Friday beforehand, and the Court made the orders sought: [2] The president said (i) the meeting was not called in accordance with D’s constitution, and (ii) for it to proceed would be to deny procedural fairness i.e. the chance to respond to criticism: [6] The president had been involved in education for 40 years, was a life member of D, and had been elected president in 2021: [15] P said that if their role as president was to end, they may need to reapply for their existing job, with a risk they might fail: [16], [42] D’s work includes seeking, and then applying, funding. The evidence suggested P would argue that they deserved credit for $20m in funding for the association: [26] Evidence suggested a power struggle and the passing of a motion of no confidence in P in December 2022: [28] – [30] In January 2023, lawyers for the 8 other members of the management committee wrote to P setting out complaints and seeking a response: [31] The complaints included complaints of misusing D’s funds: [32] P denied the complaints: [38] P was sick in hospital at the time of the hearing and would not recover in time to attend the meeting in any case: [43] P satisfied the criteria for an interlocutory injunction: proving (i) there was a serious question to be tried and (ii) the balance of convenience favoured an injunction: [47] The obligation of the association to afford P procedural fairness arose by inference: [49] – [51] For the meeting to proceed would offend that requirement due to: P’s illness, the lack of particulars of the claims made, and the lack of time given to respond to the claims: [52] – [55] As such, the Court found that a serious question arose: [58] The Ds could not show any prejudice arose from the delay, the risk of the president incurring costs that were not reasonably identifiable was not apparent: [61] P would likely suffer serious reputational loss if the meeting was to go ahead: [63] Indeed, the D may suffer loss of funding for removing its president in circumstances where procedural fairness appears that it may have been denied. The external funding D relies on may be put at risk: [64] P would almost certainly suffer financial loss if the meeting went ahead, where D would be unlikely to suffer loss: [65] The balance of convenience was met and the injunction granted: [68], [71] ___ Please look out for Coffee and Case Note and James d'Apice on your favourite platform!

Trindall v NSW Aboriginal Education Consultative Group [2023] NSWSC 85

A partnership dispute (that I have previously summarised part of) was litigated in large part, then settled: [2]  Before final orders were made, deeds were signed that saw the D pay a sum, surrender their partnership assets, and the proceedings dismissed: [4]  P, a former partner of the partnership then sued D for the same breach: [5]  D said P (1) was bound by the deeds; (2) was estopped due to res judicata; and (3) was bringing a claim which was an abuse of process: [7]  The earlier litigation related to D taking an improper benefit in breach of partnership obligations. P was never joined to them or made aware of them: [15], [19], [118]  At the core of each of issues (1), (2) and (3) is the similarity of the old litigation, and the new: [45]  The doctrine of res judicata requires, in essence, two issues, to be dealt with.  Was the first litigation a final decision? Yes, the dismissal orders were final: [79] - [83]  Next: was P a “privy” of the parties to it?: [84]  P highlighted their absence from the earlier litigation, powerlessness to intervene, and lack of knowledge of it: [88]  P’s claim was for 9.8% of the value of the breach based on P’s partnership share. In fact the 9.8% was not a share as TiC, but an entitlement on dissolution not divisible into proportions as against D: [142] - [153]  The Court found a partnership interest is analogous to a trust. Like a trust, legal interests are subject to the equities of others. As trustees are privies then, following this analogy, so are partners: [137], [178]  As such, P was estopped from pursuing this element of the claim by the doctrine of res judicata: [70], [179]  RE (2): P joined the partnership pursuant to a 2006 deed which was in force at the time of the breach: [239]  The earlier proceedings were commenced by the partnership governed by a 2017 deed (which P did not sign, having previously left): [239], [240]  The breach was suffered by the partnership at the time of the breach (i.e. pursuant to the 2006 deed) and to be distributed pursuant to that partnership’s constitution: [243], [244], [246]  The 2017 deed appointed a representative of the (new) partnership. That representative and the (new) partners ran and settled the earlier litigation: [247]  As such, the deed did not release the Ds from P’s claim: [71], [257]  RE (3): D said P’s claim was an abuse of process due to (i) the prospect of inconsistent findings, and (ii) D’s prejudice suffered if forced to relitigate a claim D considered concluded: [279]  D failed to have the proceedings dismissed as an abuse of process. D could have joined P to the earlier proceedings, and didn’t. D could have sought to have P sign up to the settlement deed, and didn’t: [72], [280], [283]  D succeeded on (2), and lost on (1) and (3): [8]  P was prevented from bringing the claim. ___  If you'd like to contact me please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!  And please look out for my podcast, Coffee and a Case Note, wherever you get your podcasts.  #coffeeandacasenote​​​​​​​​ #auslaw​​​​​​​​

A partnership dispute (that I have previously summarised part of) was litigated in large part, then settled: [2] Before final orders were made, deeds were signed that saw the D pay a sum, surrender their partnership assets, and the proceedings dismissed: [4] P, a former partner of the partnership then sued D for the same breach: [5] D said P (1) was bound by the deeds; (2) was estopped due to res judicata; and (3) was bringing a claim which was an abuse of process: [7] The earlier litigation related to D taking an improper benefit in breach of partnership obligations. P was never joined to them or made aware of them: [15], [19], [118] At the core of each of issues (1), (2) and (3) is the similarity of the old litigation, and the new: [45] The doctrine of res judicata requires, in essence, two issues, to be dealt with. Was the first litigation a final decision? Yes, the dismissal orders were final: [79] - [83] Next: was P a “privy” of the parties to it?: [84] P highlighted their absence from the earlier litigation, powerlessness to intervene, and lack of knowledge of it: [88] P’s claim was for 9.8% of the value of the breach based on P’s partnership share. In fact the 9.8% was not a share as TiC, but an entitlement on dissolution not divisible into proportions as against D: [142] - [153] The Court found a partnership interest is analogous to a trust. Like a trust, legal interests are subject to the equities of others. As trustees are privies then, following this analogy, so are partners: [137], [178] As such, P was estopped from pursuing this element of the claim by the doctrine of res judicata: [70], [179] RE (2): P joined the partnership pursuant to a 2006 deed which was in force at the time of the breach: [239] The earlier proceedings were commenced by the partnership governed by a 2017 deed (which P did not sign, having previously left): [239], [240] The breach was suffered by the partnership at the time of the breach (i.e. pursuant to the 2006 deed) and to be distributed pursuant to that partnership’s constitution: [243], [244], [246] The 2017 deed appointed a representative of the (new) partnership. That representative and the (new) partners ran and settled the earlier litigation: [247] As such, the deed did not release the Ds from P’s claim: [71], [257] RE (3): D said P’s claim was an abuse of process due to (i) the prospect of inconsistent findings, and (ii) D’s prejudice suffered if forced to relitigate a claim D considered concluded: [279] D failed to have the proceedings dismissed as an abuse of process. D could have joined P to the earlier proceedings, and didn’t. D could have sought to have P sign up to the settlement deed, and didn’t: [72], [280], [283] D succeeded on (2), and lost on (1) and (3): [8] P was prevented from bringing the claim. ___  If you'd like to contact me please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!  And please look out for my podcast, Coffee and a Case Note, wherever you get your podcasts.  <a href="https://www.youtube.com/hashtag/coffeeandacasenote" rel="nofollow" target="_blank">#coffeeandacasenote​​​​​​​​</a> <a href="https://www.youtube.com/hashtag/auslaw" rel="nofollow" target="_blank">#auslaw​​​​​​​​</a>

Zphere Pty Ltd v Pakis [2022] VSC 496

“Sell the land I own 1/56th of!”  ___  From the early 1980s a property was owned as tenants in common. Ownership was divided in sevenths: [6]  P owned one 40th of the 5/7th intersect - a 1/56th interest in the land. P sought the appointment of trustees to sell the property pursuant to s66G of the Conveyancing Act 1919 (NSW)  Each co-owner had “spheres of influence”. Some constructed residences: [9]  The use was contrary to zoning and no DAs were obtained: [11]  A 5 page “policy” document purported to deal with co-owners’ rights including a “no sale of land or transfer of shares unless all co owners agree” term: [16] - [26]  Copies of the policy were not made. The original was held by various owners over the years: [27]  The policy was only adhered to when convenient, and was contradicted at other times. New owners were not made aware of it before purchasing: [33] - [36]  To the extent the Ds were aware of the policy, that occurred after their respective purchases: [36] - [42]  In 2011, P purchased their 1/56th interest for $60K: [48]   The vendor - one of the Ds - did not get consent from other shareholders (as the policy apparently required) before effecting the transaction: [61]  P said they had not received the “policy” document before the purchase: [49] - [54]  Prior to XX, the Ds had put the “policy” as a central governing document of the property. This was shown to be untrue as it was regularly contradicted, include by vendor D: [58]  P had not returned to land since 2013, though remained owner of the land with her “sphere of influence” inaccessible except by vendor D’s driveway: [69]  From 2020 P began exploring selling her share. The Ds, particularly vendor D, were obstructive: [72] - [76]  The Ds argued appointing Tees would be an “extreme hardship” as all Ds would lose their homes: [84]  The Ds’ said P’s small proportion should militate against an order being made: [85], [86]  Unfairness and hardship are not enough to oppose a s66G order: [89]  The D’s argued that P’s application breached fiduciary obligations, gave rise to an estoppel, or was unconscionable. The Court rejected all: [98] - [101], [102] - [113]  Ds who had improved the land (despite low value due to non-compliance, no possibility for insurance, and elevated bushfire risk) could claim contributions from the sale proceeds: [116], [122]  The Court made the orders appointing Tees: [123], [130]  The Tees proposed by the Ds were appointed, as they were located closer to the property than the P’s proposed Tees: [127]  ___  Usually s66G legal costs are paid from sale proceeds: [1]  Unreasonable conduct may lead to a departure from this rule: [6]  P said the Ds should pay their own costs due to their unreasonable, failed defences; and that P’s fees should come from the sale. The Ds said all fees should be paid from sale: [7], [8]  The Court ordered that the Ds bear most of their own costs, save for those relating to the appointment of their preferred Tees: [9] - [16] ___  Please follow James d'Apice and Coffee and a Case Note on your favourite platform!

“Sell the land I own 1/56th of!” ___ From the early 1980s a property was owned as tenants in common. Ownership was divided in sevenths: [6] P owned one 40th of the 5/7th intersect - a 1/56th interest in the land. P sought the appointment of trustees to sell the property pursuant to s66G of the Conveyancing Act 1919 (NSW) Each co-owner had “spheres of influence”. Some constructed residences: [9] The use was contrary to zoning and no DAs were obtained: [11] A 5 page “policy” document purported to deal with co-owners’ rights including a “no sale of land or transfer of shares unless all co owners agree” term: [16] - [26] Copies of the policy were not made. The original was held by various owners over the years: [27] The policy was only adhered to when convenient, and was contradicted at other times. New owners were not made aware of it before purchasing: [33] - [36] To the extent the Ds were aware of the policy, that occurred after their respective purchases: [36] - [42] In 2011, P purchased their 1/56th interest for $60K: [48] The vendor - one of the Ds - did not get consent from other shareholders (as the policy apparently required) before effecting the transaction: [61] P said they had not received the “policy” document before the purchase: [49] - [54] Prior to XX, the Ds had put the “policy” as a central governing document of the property. This was shown to be untrue as it was regularly contradicted, include by vendor D: [58] P had not returned to land since 2013, though remained owner of the land with her “sphere of influence” inaccessible except by vendor D’s driveway: [69] From 2020 P began exploring selling her share. The Ds, particularly vendor D, were obstructive: [72] - [76] The Ds argued appointing Tees would be an “extreme hardship” as all Ds would lose their homes: [84] The Ds’ said P’s small proportion should militate against an order being made: [85], [86] Unfairness and hardship are not enough to oppose a s66G order: [89] The D’s argued that P’s application breached fiduciary obligations, gave rise to an estoppel, or was unconscionable. The Court rejected all: [98] - [101], [102] - [113] Ds who had improved the land (despite low value due to non-compliance, no possibility for insurance, and elevated bushfire risk) could claim contributions from the sale proceeds: [116], [122] The Court made the orders appointing Tees: [123], [130] The Tees proposed by the Ds were appointed, as they were located closer to the property than the P’s proposed Tees: [127] ___ Usually s66G legal costs are paid from sale proceeds: [1] Unreasonable conduct may lead to a departure from this rule: [6] P said the Ds should pay their own costs due to their unreasonable, failed defences; and that P’s fees should come from the sale. The Ds said all fees should be paid from sale: [7], [8] The Court ordered that the Ds bear most of their own costs, save for those relating to the appointment of their preferred Tees: [9] - [16] ___ Please follow James d'Apice and Coffee and a Case Note on your favourite platform!

Ambrus v Buchanan [2022] NSWSC 1628

Susanna Lobez

James is sometimes invited to give presentations and talks for external legal training providers. Please enjoy this talk James gives on the distinctions between corporate oppression and derivative actions. And please don't forget to follow James and Coffee and a Case Note on your favourite platforms!

James is sometimes invited to give presentations and talks for external legal training providers. Please enjoy this talk James gives on the distinctions between corporate oppression and derivative actions. And please don't forget to follow James and Coffee and a Case Note on your favourite platforms!

TVED CLE January 2023 - A discussion with James d'Apice and Susanna Lobez about "Shareholder Remedies"

“You said our companies wouldn’t have to pay back those loans!”  ___  A group of entities controlled by P (“P”) was in business with a group of entities controlled by D (“D”). P and D did property development work together via various operating Cos (“OpCos”): [3]  P commenced oppression proceedings (s232) saying that D breached their duty to OpCos, and the ACL: [4]  P sought the Court’s leave to bring those derivative claims on behalf of OpCos (s236): [5]  P and D conducted their projects in quasi-partnership: [10]  In around 2019 D made loans to OpCos to support a development. P says D promised those loans would not be called in except for in certain circs which had not occurred: [15]  In late 2021 D, without notice, enforced their loans and appointed receivers to OpCos: [17]  P says this was a breach of D’s directors duties, and that all Ds had engaged in misleading or deceptive conduct by: giving assurances the loans would not be enforced, and then enforcing them: [18], [19]  There was a suggestion D did this to bring a specific development to an end: [22]  P sought leave to bring derivative actions on behalf of OpCos in relation to this conduct, having already commenced an oppression claim.  The Court worked through the s237(2) criteria: (a) OpCos would not bring the claims as D would prevent that: [26] (b) P came in good faith, pursuing a genuine claim for a missed opportunity for profit: [27] (d) There was a serious issue to be tried, including because D provided no explanation: [28] (e) The notice requirement was not met but the Court would waive it: [29]  This left s237(2)(c) for consideration: was in the best interests of OpCos for P to be granted leave?  It was “undoubted” that resolving the P and D conflict would be in OpCos’ best interests: [39]  Further, as OpCos were in receivership, litigation would not upset its day to day business: [40]  D suggested P’s claim was weak. This was rejected: [50]  The Ds suggested their worth was not proven (i.e. if leave was granted, would OpCos be suing parties with any assets?) Ds assets were within D’s knowledge and no evidence was put on it. Noting D’s ability to obtain big finance it was possible to infer D had substance: [51] - [53]  P provided $750K as security if OpCos faced an adverse costs order, which was sufficient: [64]  Extensive consideration was given to the contrast between the oppression remedy and a derivative action: [66] - [88]  Some of the Ds were found not to be proper parties to an oppression claim. This left s236 as the appropriate path to pursue them, not s233: [92] - [96]  Leave was granted to P to pursue the derivative actions against the Ds: [98] ___ Please look out for Coffee and a Case Note and James d'Apice on your favourite platforms!

“You said our companies wouldn’t have to pay back those loans!” ___ A group of entities controlled by P (“P”) was in business with a group of entities controlled by D (“D”). P and D did property development work together via various operating Cos (“OpCos”): [3] P commenced oppression proceedings (s232) saying that D breached their duty to OpCos, and the ACL: [4] P sought the Court’s leave to bring those derivative claims on behalf of OpCos (s236): [5] P and D conducted their projects in quasi-partnership: [10] In around 2019 D made loans to OpCos to support a development. P says D promised those loans would not be called in except for in certain circs which had not occurred: [15] In late 2021 D, without notice, enforced their loans and appointed receivers to OpCos: [17] P says this was a breach of D’s directors duties, and that all Ds had engaged in misleading or deceptive conduct by: giving assurances the loans would not be enforced, and then enforcing them: [18], [19] There was a suggestion D did this to bring a specific development to an end: [22] P sought leave to bring derivative actions on behalf of OpCos in relation to this conduct, having already commenced an oppression claim. The Court worked through the s237(2) criteria: (a) OpCos would not bring the claims as D would prevent that: [26] (b) P came in good faith, pursuing a genuine claim for a missed opportunity for profit: [27] (d) There was a serious issue to be tried, including because D provided no explanation: [28] (e) The notice requirement was not met but the Court would waive it: [29] This left s237(2)(c) for consideration: was in the best interests of OpCos for P to be granted leave? It was “undoubted” that resolving the P and D conflict would be in OpCos’ best interests: [39] Further, as OpCos were in receivership, litigation would not upset its day to day business: [40] D suggested P’s claim was weak. This was rejected: [50] The Ds suggested their worth was not proven (i.e. if leave was granted, would OpCos be suing parties with any assets?) Ds assets were within D’s knowledge and no evidence was put on it. Noting D’s ability to obtain big finance it was possible to infer D had substance: [51] - [53] P provided $750K as security if OpCos faced an adverse costs order, which was sufficient: [64] Extensive consideration was given to the contrast between the oppression remedy and a derivative action: [66] - [88] Some of the Ds were found not to be proper parties to an oppression claim. This left s236 as the appropriate path to pursue them, not s233: [92] - [96] Leave was granted to P to pursue the derivative actions against the Ds: [98] ___ Please look out for Coffee and a Case Note and James d'Apice on your favourite platforms!

CIP Group Pty Ltd v So [2022] FCA 1490

P lodged a caveat on a property owned by D in Darling Point, Sydney. D sought its removal.  P was the deceased’s son by an earlier marriage. After P’s birth, the deceased married D and they had another child together: [4] - [7]  The deceased operated a cattle and macadamia business on land owned by an entity the deceased and D themselves owned and controlled: [9], [10]  In 2011 the deceased made a will and a Memorandum of Wishes. D counter-signed the latter: [12] - [15]  By the Will the deceased bequeathed the property to D. By the MoW, D agreed to bequeath the property (or its replacement if the property was sold and a new property was bought) to P and the other child in equal shares. Until then the deceased acknowledged D may need to use the proceeds of sale of the property for their upkeep, or for the cattle and macadamia business: [17]  (Perhaps unhelpfully, the deceased wished for the MoW to remain confidential: [18])  P sued seeking a declaration D held half the property on trust for them and lodged a caveat on the basis of this alleged trust: [21], [22]  D sought the removal of the caveat, including to allow them to deal with the property (possibly by refinancing) to help manage the farm and its business in the wake of flooding: [29], [30]  P argued that their (and their half-sibling’s) interest in the property was held by D on trust created by the MoW: [32]  P accepted D was free to sell the property: [33], [35]  The Court found D accepted their obligation under the MoW to make a will bequeathing the property to the children equally. There was no suggestion D did not intend to do so: [36], [39]  D’s “floating” obligation to bequeath the property to the children will only crystallise into a trust on D’s death, not before: [38]  As such, P had no beneficial interest to support to caveat: [40]  Even if a caveatable interest had been found, it was accepted that the caveat caused D inconvenience. However, P had the onus to show convenience favoured maintenance of the caveat and P failed to show that: [45], [46]  P was ordered to remove the caveat and pay D’s legal costs: [47], [48] ___ Please follow James d'Apice and Coffee and a Case Note on all your fave platforms!

P lodged a caveat on a property owned by D in Darling Point, Sydney. D sought its removal. P was the deceased’s son by an earlier marriage. After P’s birth, the deceased married D and they had another child together: [4] - [7] The deceased operated a cattle and macadamia business on land owned by an entity the deceased and D themselves owned and controlled: [9], [10] In 2011 the deceased made a will and a Memorandum of Wishes. D counter-signed the latter: [12] - [15] By the Will the deceased bequeathed the property to D. By the MoW, D agreed to bequeath the property (or its replacement if the property was sold and a new property was bought) to P and the other child in equal shares. Until then the deceased acknowledged D may need to use the proceeds of sale of the property for their upkeep, or for the cattle and macadamia business: [17] (Perhaps unhelpfully, the deceased wished for the MoW to remain confidential: [18]) P sued seeking a declaration D held half the property on trust for them and lodged a caveat on the basis of this alleged trust: [21], [22] D sought the removal of the caveat, including to allow them to deal with the property (possibly by refinancing) to help manage the farm and its business in the wake of flooding: [29], [30] P argued that their (and their half-sibling’s) interest in the property was held by D on trust created by the MoW: [32] P accepted D was free to sell the property: [33], [35] The Court found D accepted their obligation under the MoW to make a will bequeathing the property to the children equally. There was no suggestion D did not intend to do so: [36], [39] D’s “floating” obligation to bequeath the property to the children will only crystallise into a trust on D’s death, not before: [38] As such, P had no beneficial interest to support to caveat: [40] Even if a caveatable interest had been found, it was accepted that the caveat caused D inconvenience. However, P had the onus to show convenience favoured maintenance of the caveat and P failed to show that: [45], [46] P was ordered to remove the caveat and pay D’s legal costs: [47], [48] ___ Please follow James d'Apice and Coffee and a Case Note on all your fave platforms!

Thynne v Jevny Pty Limited [2022] NSWSC 1774

James takes us inside the life of a lawyer and inside coffee shops throughout his hometown while debriefing us one case note at a time. His candor and charm hold your interest while making law interesting and digestible! Every case has nuisances that stir up issues worth contemplating and considering on your way to work. Have a listen, you won’t be disappointed. - Julia Taus, Philadelphia, USA

This brew is nicely blended & full of flavor!

Coffee and a Case Note

The best podcast episodes of anyone with an interesting story. With famous guests like Obama, LeBron James, Drake, Oprah Winfrey, Richard Branson, Michelle Obama, Serena Williams, to anyone who has a unique and interesting story to tell. Add episodes you're interested into your queue below!

Best Episodes: Personal Stories & Great Interviews

The best podcasts on investing. For anyone interested in the stories in the investing industry, whether it's an interview with Ray Dalio or Ed Thorp to the writer of The Big Short. This topic includes the most fascinating stories from all the best investors. Add episodes you're interested into your queue below!