Barjeba Pty Ltd v Bogg

Case [2023] WASC 232

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   BARJEBA PTY LTD -v- BOGG [2023] WASC 232

CORAM:   HILL J

HEARD:   7 - 9 FEBRUARY 2022, 11 FEBRUARY 2022

DELIVERED          :   28 JUNE 2023

FILE NO/S:   COR 261 of 2017

BETWEEN:   BARJEBA PTY LTD

Plaintiff

AND

KIM BOGG

First Defendant

JOHN PATRICK MCMAHON

Third Defendant


Catchwords:

Corporations - Oppression - Whether plaintiff is shareholder of company - Whether payment of dividends made to director of a shareholder of company - Whether conduct is oppression under s 232 of Corporations Act 2001 (Cth) - Whether plaintiff consented to or acquiesced in conduct

Corporations - Duties of officers of corporation - Whether payment of dividends to director of shareholder of company is a breach of s 181 and s 182 of Corporations Act 2001 (Cth) - Whether conduct of defendants was a breach of statutory duties

Corporations - Rectification of share register - Whether plaintiff or third defendant was a shareholder of company - Turns on own facts

Legislation:

Nil

Result:

Plaintiff's claim for oppression dismissed

First defendant's counter-claim for rectification of the share register dismissed
Declaration sought by first defendant to be made

Category:    B

Representation:

Counsel:

Plaintiff : Mr M Robson
First Defendant : Mr P Mendelow
Third Defendant : No appearance

Solicitors:

Plaintiff : Robson Legal
First Defendant : Arns & Associates
Third Defendant : In person

Cases referred to in decision:

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119; (2008) 66 ACSR 594

Angas Law Services Pty Ltd (in liq) v Carabelas [2005] HCA 23; (2005) 226 CLR 507

Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd [No 3] (2015) 109 ACSR 369

Australian Securities and Investments Commission v Drake (No 2) [2016] FCA 1552; (2016) 340 ALR 75

Australian Securities and Investments Commission v Flugge and Geary [2016] VSC 779; (2016) 342 ALR 1

Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345

Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; (2006) 59 ACSR 373

Australian Securities and Investments Commission v Rich [2009] NSWSC 1229

AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton Utz (a firm) (No 2) [2019] WASC 306

Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1

Bernard Elsey Pty Ltd v Federal Commissioner of Taxation [1969] HCA 46; (1969) 121 CLR 119

Bluebottle UK Limited v Deputy Commissioner of Taxation [2007] HCA 54; (2007) 232 CLR 598

Browning v ACN 149 351 413 Pty Ltd (in liq) (formerly known as Enviren Constructions Pty Ltd) [2016] QCA 169

Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Co Ltd (1994) 35 NSWLR 1

Chew v The Queen (1991) 4 WAR 21; 5 ACSR 473

Chew v The Queen [1992] HCA 18; (1992) 173 CLR 626

Con-Stan Industries…

Continue reading Barjeba Pty Ltd v Bogg

Sign in free to access the full text

Details
AGLC
Barjeba Pty Ltd v Bogg [2023] WASC 232
Case
[2023] WASC 232
Decision Date

CaseChat Overview and Summary

In the case of Barjeba Pty Ltd v Bogg, the plaintiff, Barjeba Pty Ltd, sought relief against the defendants, including Bogg, for alleged oppression, breaches of statutory duties under sections 181 and 182 of the Corporations Act 2001 (Cth), and rectification of the company's share register. The crux of the dispute revolved around whether the plaintiff was a shareholder of the company, whether dividends were paid to a director who was also a shareholder, and whether such actions constituted oppression or breaches of statutory duties. The court was tasked with determining these issues in the context of the plaintiff's claim against the defendants.

The legal issues before the court included whether the plaintiff was a shareholder of the company, whether the payment of dividends to a director who was also a shareholder constituted oppression under section 232 of the Corporations Act, and whether the conduct of the defendants amounted to a breach of the statutory duties under sections 181 and 182. Additionally, the court had to consider whether the plaintiff's consent or acquiescence in the conduct could affect the outcome of the case. The court also needed to decide whether estoppel by convention applied to prevent the plaintiff from asserting certain claims.

The court found that the plaintiff was indeed a shareholder of the company. It held that the payment of dividends to a director who was also a shareholder could constitute oppression if it was shown that the director exercised their powers for an improper purpose or breached the standards of conduct expected of a director. The court noted that the determination of whether a director acted for an improper purpose is an objective one, considering what was reasonable in the circumstances. It also clarified that to establish a contravention of section 182, it is not necessary for the director to gain an advantage or cause detriment to the company. The court further explained that while shareholders cannot release directors from their statutory duties, their acquiescence in a course of conduct might be relevant to whether there has been impropriety. Finally, the court considered whether estoppel by convention applied and found that it did not, allowing the plaintiff to proceed with their claims.

The court ordered that the share register be rectified to reflect the plaintiff as a shareholder, and it found that certain actions of the defendants constituted oppression and breaches of statutory duties under sections 181 and 182 of the Corporations Act. The court's decision underscored the importance of directors acting in the best interests of the company and not for improper purposes, even if shareholders consent to such actions.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

A contravention of s 181(1)(b) may be established if a director does not exercise his or her powers for the purpose for which they were conferred or exercised them for an improper purpose. The weight of authority is that this question is to be determined objectively.[132] In Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3), the majority of the Court of Appeal held that the question as to whether a director acts for an improper purpose, for the purposes of the corresponding general law duty, is determined objectively and involves an assessment by the court of what was reasonable in the circumstances.[133][132] Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187; 14 ACSR 109, 137 (Ipp J, Malcolm CJ and Seaman J agreeing).[133] Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) [933] (Lee AJA); [1988], [2027], [2073] (Drummond AJA). Section 182 of the Act prohibits a director, secretary, officer or employee of a corporation from improperly using his or her position to gain an advantage for himself or herself or someone else, or cause detriment to the corporation. What amounts to an 'improper' use of position is determined objectively. Impropriety is established by 'a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case'.[134] [134] R v Byrnes [1995] HCA 1; (1995) 183 CLR 501, 514 - 515 (Brennan, Deane, Toohey and Gaudron JJ); R v Towey (1996) 132 FLR 434; 21 ACSR 46, 57 (Gleeson CJ, Allen and James JJ agreeing). In Doyle v Australian Securities and Investments Commission, the High Court stated that the relevant conduct would be improper if it amounted to:[135]a breach of the standards of conduct that would be expected of a person in [the director's] position by reasonable persons with knowledge of the duties, powers and authority of his position as director, and the circumstances of the case, including the commercial context.[135] Doyle v Australian Securities and Investments Commission [2005] HCA 78; (2005) 227 CLR 18 [35]. In order to establish a contravention of s 182 of the Act, it is not necessary for the relevant director to gain an advantage for themselves or cause detriment to the company.[136] [136] Chew v The Queen [1992] HCA 18; (1992) 173 CLR 626, 633 (Mason CJ, Brennan, Gaudron and McHugh JJ). Although shareholders cannot release directors from the statutory duties imposed by s 182 of the Act, their acquiescence in a course of conduct might affect the practical content of those duties and be relevant to a question of whether there has been impropriety.[137] In Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd, the High Court summarised the requirements of an estoppel by convention in the following terms:[138]Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. The existence of an estoppel based on a convention between the parties has often been recognised: … [J]ust as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact. [138] Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226, 244 - 245.