Coffee and a Case Note

“Your new jewellery Co breaches the duties you owed our old Co!”
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P, a 40% shareholder in OldCo, sued D1 for breaching their duties to OldCo, and sued other Ds for knowingly assisting: [1] – [5]
OldCo ran a jewellery business which grew over time: [2], [24]
In April 2022, NewCo was incorp’d with D1 as s/h. It began doing retail and online business from OldCo’s premises (!) without P’s controlling mind’s knowledge: [33] - [38]
A dispute arose in relation to “shareholder loans”, leading D1 to apply to wind up OldCo on just and equitable grounds: [39] – [44]
In 2022, after OldCo failed to pay rent, the landlord offered a lease to NewCo which was accepted: [45] – [48]
Later in 2022, OldCo was wound up: [52] – [54]
In 2023, D1 became a director of NewCo: [61], [62]
Following Court approval OldCo’s claims against the Ds were assigned (for value) to P, with any proceeds paid to P and OldCo: [63] – [65], [87] – [92]
Having purchased the claims, P brought these proceedings: [66]
It was alleged that D1 breached inter alia the profit rule and the conflict rule, as well as statutory duties: [99]
It was alleged that the other Ds knowingly assisted D1: [141]
P said that D1’s causing of NewCo to make jewellery sales from the Premises while OldCo was still registered diverted OldCo sales; a DD breach: [144]
From NewCo’s incorporation to OldCo’s deregistation, all sales made by NewCo were made while D1 was in a position of conflict: [156]
The Court was satisfied D1 incorp’d NewCo to take over the business of OldCo: [157]
D1 ensured NewCo could use OldCo’s premises for its business (including by paying OldCo’s unpaid backrent to secure the premises for NewCo): [159]
D1 was found to have breached the profit rule and the conflict rule, as well as their statutory duties: [168], [169]
The Court considered whether the other Ds engaged in Barnes v Addy “knowing assistance” and / or “involvement” in the breach of D1’s statutory DDs: [170]
It was found that D1’s breach of duties was indeed dishonest: [190]
D2, which was NewCo, was found liable. The other Ds (some natural persons and a Co) were not: [196], [208], [209] – [211]
After much consideration, the Court ordered compensation against D1 of ~$690K plus interest (that amount being goodwill, diverted sales, and fitout): [276], [277], [288], [295]
An opportunity to make costs submissions was granted: [292], [293]

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In 2026 James had the opportunity to sit down with Ben Hudson from the Unbilled Unfiltered podcast for a wide-ranging discussion about legal practice, the lawyers James is "deeply unimpressed" by, and what role a failed rap career plays for a litigator.

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“Put me back as director and correct the share register!”
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P sought an interlocutory injunction. P said they had been invalidly removed as Dir of a Co, and their shareholding improperly diluted: [1], [2]
P said D had taken control of the Co to make it sell its business and property: [1]
P helped establish the Co, contributing assets: [7](1) – (2)
There was past tension between P and a former Dir (now dead) leading to D’s involvement: [7](5) – (6)
In August 2026 resol’s were passed including appointing P as Dir: [7](10)
Later, forms were lodged suggesting P was removed as Dir, despite not having resigned nor having been provided with notice of any meeting re P’s potential removal as Dir: [7](12)
P was then excluded from the Co’s mgmt: [7](13)
Evidence suggested D was in Thailand: [7](17)
In Sep 2026, P visited the Co’s offices only to be told the Co’s business had been sold, with responses to some Qs being “above [the answerer’s] paygrade”: [8]
(The evidence was incomplete re the progress of any potential sale: [10])
P’s lawyer tried to inspect the Co’s books and records at its agent’s office and was turned away: [9]
The Court considered the relevant law noting P had to show (i) a prima facie case, and (ii) that the balance of convenience favoured relief: [3] – [5]
P’s claims were broadly stated; unauthorised dealings and “unwarranted oppression”: [12]
The injunction sought was to prevent the Co dealing with its business and real property: [13]
The Court found it arguable that (i) P was improperly removed as Dir, and (ii) an unauthorised agreement may have been improperly made with a 3rd party to sell the Co’s business: [14], [15]
Further, it was arguable that (iii) any dist’n of sale proceeds would not be in a proportion with the true shareholding in the Co: [14]
1st re balance of convenience: there was a prospect of a sale completing and proceeds flowing to D out of jurisdiction, radically altering the status quo: [15]
2nd re BoC: even though the orders might complicate a possible sale and the Co’s mgmt, notice could be given to third parties and there was liberty for parties to apply – largely curing this issue: [16]
The relief sought by the P was granted: [17]

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“I own 40% of you, and I’m winding you up!”
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The Ps sued to wind up a Co pursuant to s461(1)(k), the “just and equitable” basis. The Co opposed: [1], [4]
The Ps held 40% of the Co’s shares, an SPV incorp’d for residential development: [1], [2], [157]
The remaining 60% to 2 entities whose controlling minds were also Dirs of the Co: [7] – [11]
The Ps referred to: apparent insolvency of the Co, a breakdown of relationships, and “exorbitant” mgmt fees “gouged” by an entity related to 2 of the Co’s Dirs: [3], [149] – [151]
In 2021 the Ps and the Co had entered into an arrangement where the Ps loaned ~$5m for buying the property, to be repaid from profits following development: [12]
In December 2021, the Co bought the property for ~$10m; funded in part by the Ps’ loan: [13] – [15]
The Dirs of the Co incorp’d OtherCo to provided management services to the Co; $30K per month. The Ps were not told of this: [16] – [20]
From 2022, the Co undertook various steps (including running NSWLEC proceedings) to obtain relevant DAs: [21] – [28]
Rent was collected on the Co’s property from 2022. It was not paid to the Co but was paid to OtherCo: [29] – [31]
The Ps initially sued seeking repayment of the $5m. They lost: [32] – [34]
The Ps took the view the development was “unviable”; likely unprofitable. The Court accepted this: [43], [95]
The Ps’ experts’ figures suggest the development would be worth $22m, for a cost of $35m; a loss of ~$13m: [45] – [88]
The Court accepted there was no possibility of the Co obtaining external finance: [110], [158]
Nor was it likely finance could be obtained from a related party: [117]
The Court noted insolvency may be relevant to a just and equitable wind up application: [118]
After extended considering of the relevant tests for insolvency, and with the assistance of expert evidence, the Court accepted the Co was likely cash flow and balance sheet insolvent: [148]
The Court lacked confidence in the conduct of the Co’s affairs, such that it was just and equitable that it be wound up: [164]
Where the Co was not run as a quasi-partnership, the fact that there was a breakdown in the relationship of trust and confidence between the parties was not sufficient to obtain a winding up order: [169] – [176]
The Court found there were no alternative s 467(4) remedies: [177] – [195]
The Court ordered that the Co be wound up and that the Ps’ legal costs would be costs in the winding up: [199]

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“You breached the shareholders agreement, so transfer your shares to me!”

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P and D were shareholders in a Co. P (who held 40%) sued D (who held 60%) alleging D’s breaches of the SHA entitled P to have D’s shares transferred to P: [1] – [4], [7]

This breaches, said P, were D taking unauthorised loans and D’s granting security over its shares in the Co: [2]

The Co did scaffolding work and was of some size; ~$11m annual revenue, ~55 employees: [6]

The Co had developed out of a business operated by D, with P’s controlling mind acting as director and manager: [9]

No party challenged the SHA’s validity. It applied: [17]

D licensed its IP and provided services to the Co – for payment – over the years: [19], [20]

The D’s work for the Co included, necessarily, having some control over the Co’s bank account. The D (whether by its agents or otherwise) made payments from these accounts: [21], [22]

Over time a loan balance grew. By 2025 D was indebted to the Co for ~$1.9m: [23] – [27]

P’s consent was not sought for the advances that led to this balance. i.e. they were made without P’s approval: [28]

In 2025 an insolvency risk loomed for D. It missed some superannuation payments owed to its employees: [29]

P issued D a default notice pursuant to the SHA in relation to the loan balance. D accepted the notice was properly issued [30] – [36]

The issuing of the notice commenced the SHA’s default sale process: [34]

In 2022 D had granted a security of all of its assets (i.e. including its shares in D): [37]

In 2025 P discovered the security via a PPSR search conducted as part of prep for P acquiring D’s shares: [39]

Shortly after this discovery, P issued a security default notice pursuant to the SHA: [40]

Although the breach was remedied after the notice was issued, P had commenced the default sale process beforehand: [41] – [46]

Despite D’s contrary assertion, the commencement of other legal proceedings by the Co was not a termination of the SHA – and even if it was, P’s rights pursuant to the default notices survived: [47] – [48]

The Court then considered whether specific performance was the appropriate remedy. The remedy of specific performance is discretionary: [49] Damages were an inadequate remedy for the P’s loss. Prima facie: spec perf should be ordered for breaches concerning shares in a private Co: [54]

D argued that the SHA had a valuation method, enabling damages to be quantified. The Court disagreed finding the control premium would not be accounted for with that method: [55] – [57]

D tendered no evidence of its capacity to remedy the defaults: [62]

No hardship issues stood in way of the Court exercising its discretion to order spec perf: [78]

P was entitled to spec perf of the share transfer: [79]

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In July 2026, James has an opportunity to sit down with Hall & Wilcox partner and host of the Hall & Wilcox podcast "What's in a name?" to talk about diversity, inclusiveness, and using one's privilege for the benefit of all.

You can find the original podcast here:

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“I need some documents to figure out if I have an oppression claim.”

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P, a 1.15% shareholder in ASX-listed D, sought production of 6 categories of documents from D pursuant to s 247A: [1], [6]

D opposed the application saying there was no case to be investigated: [4]

D’s major business was an NDIS service provider operated by a wholly owned subsidiary, SubCo: [7]

The NDIA claimed SubCo has received $800K it was not entitled to, with the figure of $400K eventually arrived at: [8], [12]

In September 2024, SubCo’s inconsistency in NDIS claims led the NDIA to suspend payments: [9]

A trading halt and suspension were placed on D’s shares: [14]

Admins were appointed to SubCo who reported SubCo had poor controls and D’s Dirs may have breached their duties: [15]

In Jan 2025 SubCo was placed into liq: [16]

SubCo was later permanently banned from providing NDIS services: [17]

Since June 2025, P raised concerns the management of SubCo and possible claims against SubCo’s Dirs: [18]

SubCo did not conduct an AGM in 2025 or 2026 and did not allow shareholders an opportunity to ask Qs of its dirs or auditors: [19]

A Feb 2026 update from SubCo noted the turbulence and telegraphed hopes at improved performance in future; disposing of some assets and thinking strategically: [21], [22]

P’s reasons for seeking the documents were (i) to ascertain whether SubCo could remain listed, (ii) whether the Dirs could manage SubCo, (iii) whether the Dirs breached their DDs, (iv) whether the shareholders had any claims, or (v) whether there had been oppressive conduct: [23]

The Court considered the law relating to s 247A applications and found production of some documents was appropriate, noting: an application must be brought in “good faith and for a proper purpose”; the Court has a broad discretion as to relief; document access is for specific purposes, not to give an applicant a general picture; noting SubCo’s failure to comply with its obligs: [24] – [31]

The Court accepted there were cases to be investigated as to whether D breached its NDIS and other governance / reporting obligations, and whether its Dirs breached their duties: [32]

The Court then considered the various proposed document categories.P sought a broad range of documents. The Court (respectfully) closely considered the various categories finding some (like Dir meeting minutes) ought to be produced and others (like corro between D and its auditors) ought not, while leaving room for the parties to negotiate amended categories if needed: [34] – [52]

The Court accepted it was appropriate to exercise its discretion to make orders for inspection of some documents sought by P: [54], [55]

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“I’m the regulator. You’re getting wound up.”
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ASIC sought an order winding up a Co pursuant to s 461(1)(k): [1]
Neither the Co nor its Dir appeared in the litigation: [2]
(A Co failing to appear at its own winding up application did not inspire confidence in the Co’s management: [20])
The Court considered some general principles relating to ASIC s 461(1)(k) apps including: (i) the importance of a lack of confidence in a Co’s management; (ii) the requirement that a risk to the public interest (including where investor funds might be put at risk) be demonstrated; and (iii) generally, the Court’s reluctance to wind up a solvent Co: [16] – [18]
At relevant times, the Co held an AFS and provided investment services, apparently specialising in bonds: [21] – [27]
The Co purported to sell to retail clients (or acquire on their behalf) bonds which did not exist, or which the Co was unable to sell or hold on behalf of its clients: [28]
i.e. It was a scam.
The Court heard from various clients who has been deceived.
One client transferred $100K to the Co to secure bonds issued by a reputable institution, the problem being: that institution had never issued bonds of that kind: [30] – [32]
Another transferred $250K to the Co to secure bonds which the original issuer had not approved for issue to retail clients: [33] – [36]
Another transferred $120K to the Co to secure bonds which, evidence showed, were not acquired by the Co: [37] – [39]
A further client transferred $160K to acquire bonds which it appeared did not exist: [40], [41]
The Co provided false information to its auditor: [42] – [45]
ASIC reviewed the Co’s accounts forensically and found $17m had been transferred to the Co. $9m of that had been applied to crypto assets. Only $100K had been invested in bonds: [46] – [49]
The Co had no other assets of note: [50]
Evidence showed the Co’s sole director had no involvement in its affairs or knowledge of its financial position: [51] – [53]
In July 2026, the Co indicated in writing to a client it was “winding down” operated with assets to be “assessed for liquidation”. This led ASIC to correspond with the Co’s lawyers, who were unable to obtain instructions: [58] – [60]
There were strong grounds for a lack of confidence in the Co’s management: (i) the Co misled clients about investing in bonds that did not exist; (ii) the Co sent false accounts to its auditor; (iii) having taken ~$17m from clients for bonds, the Co has only purchased ~$100K of bonds, and otherwise invested in crypto and no other assets of value; and (iv) the Co’s Dir has exercised no oversight over the Co: [61]
The Court accepted the Co’s existence presented a risk to the public interest: [62], [63]
There was some doubt as to the Co’s solvency: [64]
The Court found it was just and equitable that the Co be wound up pursuant to s461(1)(k): [67]

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“You haven’t proved the shares’ value, so we need a receiver!”

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P, D3, and D4 were equal 1/3 shareholders in a defence consulting Co. P sought a s 233 order that D3 and D4 buy its shares: [1], [2], [9]
There were disputes between the dirs (each controlling P, D3, and D4) in managing the Co: [3] – [43]
In late 2024 the Co was invited to tender for defence work. D3 and D4 were unimpressed with P’s contribution calling P “a complete dud”: [65] – [71]
D3 and D4 relied on ChatGPT to guide their removal of P – “not a prudent choice of adviser…”: [73], [77], [82], [83]
ChatGPT’s output was employment focused; silent on corporate risks: [86], [93]
The plan, which was executed in essence, was to gradually exclude P and to withhold dividends: [88], [121]
Following this plan, D3 and D4 conducted meetings and sent emails incorrectly framing as employment only: [89] – [98]
P removed D3’s and D4’s access to the Co’s Xero account: [99]
The erosion of trust and confidence justified a s 461(1)(k) winding up orders, and amounted to oppression: [113]
Further steps were taken to exclude P from a role at the Co, including directing P not to present to a new client: [116] – [129]
In May 2025 P’s lawyers wrote to the D3, D4, and the Co making complaints upheld and accepted by the Ds in XX. No remedial steps were taken: [161], [162]
On 14 May 2025 proceedings were commenced. D3 and D4 set a meeting for 7.30am the following day, apparently to frustrate P’s application: [163] – [167]
D3’s and D4’s conduct, combined with the litigation, saw P’s role at the Co further reduced: [174]
D3 and D4 took steps (in relation to IT and external contractors) that required unanimous approval without P’s consent: [178]
D3 and D4 executed a contract between the Co and an external sub-Co they controlled, for provision of services: [189]
Oppression was established noting the exclusion of P in the absence of a genuine offer to buy P’s shares; and in respect of the dividend strategy allowing D3 and D4 to be paid while P was not: [265]
The Court found it could not accept either valuer’s evidence as to share value – leaving no finding made as to the valuation of P’s shares, and so no ability to make a buyout order: [285], [315]
The Court was unmoved by one expert’s methodology; and disagreed with the way the other expert dealt with the “only one client who can terminate for convenience risk” of working for defence: [316]
A share buyback did not arise as the Co did not appear: [320]
After considering appointment of a receiver to sell the shares at length, and noting the Co was a viable one, the Court concluded a receiver was the best alternative: [340]
Orders appointing a receiver to sell the shares were made: [351]

“It’s not my fault the payments were a pointless waste!”
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2 families resolved to develop land through a unit trust: [1], [2]
R held a 40% stake. A, and related interests, held the remaining 60%: [2] – [4]
At trial, R won an oppression claim alleging A caused the Co’s conduct to be unfairly prejudicial: [6]
The Co bought land in 2012 for $3m and sold it for $11m in 2015. The sale proceeds were distributed at A’s direction: [8]
The docs for the sale were strange, including A instructing lawyers while withholding the purchase price: [35]
After settlement, A finally disclosed the $11m sale price, and $3m in other payments: [47]
Apart from costs, legal fees, duties, commission, balance to the Co etc, 3 further payments were made: one to the mortgagee, and two others which R criticised: [100]
One of the payments was made to an entity controlled by A’s sibling: [109]
The other was “highly unusual… to say the least”, with A’s evidence “very unimpressive”. The amount was large, not owed, and paid to a Co incorporated days before settlement whose Dir and s/h was known to A, with no connection to the land: [111]
The sole Dir and s/h of the purchaser of the property was also a Dir of the real estate agent who enjoyed a commission of $1m on the sale: [30], [31]
The trial judge found for R, that: (i) A was responsible for the payments, (ii) that the two payments made on settlement were oppressive, and (iii) A’s responses to requests for info were inadequate: [11]
A appealed on the basis that: (i) the judge was wrong for finding A responsible for the payments, (ii) R delayed their claim, and (iii) the judge erred re A’s response to R’s enquiries: [13]
There was no contest about whether the 3rd party recipients were entitled to receive the two payments. (All agreed they weren’t.) The issue was A causing the payments to be made: [14]
The primary judge found A gave the payment directions, was responsible, and should have ensured all payments were properly incurred: [48] – [52], [54]
Some payments were a “pointless waste” of Co funds: [53], [56]
The trial judge found A’s responses to info requests for information were unfairly discriminatory: [59]
The judge found any delay from R had not prejudiced A: [64]
A’s subs on appeal were, broadly, that A was a mere intermediary; not responsible: [68] – [88]
R said R’s claim was about a breach of duty misunderstood the nature of s 232: [89] – [93]
The Court agreed with the primary judge that A was not a “mere intermediary”; mindlessly and powerlessly accepting direction from their sibling: [104], [105]
The primary judge accepted A “did not profit personally” from the strange additional payments, though noted an entity controlled by their sibling did: [109], [110]
A did not demonstrate an error made by the trial judge re R’s delay, or A’s non-disclosure: [119], [120]
Appeal dismissed: [121], [122]

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