Bux Global Limited v Hooke

Case [2018] FCA 882

FEDERAL COURT OF AUSTRALIA

Bux Global Limited v Hooke [2018] FCA 882

Appeal from: Application for leave to appeal:  Hooke v Bux Global Limited [2018] FCA 740
File number: WAD 231 of 2018
Judge: MCKERRACHER J
Date of judgment: 7 June 2018
Catchwords:

CORPORATIONS – winding up application – whether the plaintiffs have standing to seek the winding up of the company – whether the plaintiffs are contributories under the definition in s 9 of the Corporations Act 2001 (Cth) – where the plaintiffs are registered holders of shares – where the plaintiffs should be permitted to seek standing in the substantive winding up proceedings.

PRACTICE AND PROCEDURE – application for leave to appeal – application for stay of proceedings – where the primary judge dismissed an application for summary judgment – where the primary judge's decision is not attended with sufficient doubt to warrant the grant of leave to appeal – where no substantial justice would be wrought – held: leave to appeal refused.
Legislation:

Corporations Act 2001 (Cth) ss 9, 231, 231(b), 461, 462

Federal Court of Australia Act 1976 (Cth) s 24(1)(a), 24(1A), 24(1D)(b), 31A(2)(b)

Cases cited:

Avon Downs Pty Ltd v Commissioner of Taxation (Cth) (1949) 78 CLR 353

Dalgety Downs Pastoral Co Pty Ltd v Commissioner of Taxation (Cth) (1952) 86 CLR 335

Décor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397

Enviroco Ltd v Farstad Supply A/S [2011] 1 WLR 921

Gold Peg International Pty Ltd v Kovan Engineering (Aust) Pty Ltd [2005] FCA 1794

Re Independent Quarries Pty Ltd (1993) 12 ACSR 188

Itex Graphix Pty Ltd v Elliott (2002) 54 NSWLR 207

Jones v Thompson [2017] FCA 125

Kessey v Golledge (1999) 30 MVR 95

Maddocks v DJE Constructions Pty Ltd (1982) 148 CLR 104

Maertin v Klaus Maertin Pty Ltd (2006) 57 ACSR 714

Moskios v Splendid Developments Pty Ltd [2011] NSWCA 210

Natural Extracts Pty Ltd (now called Benchmark Essential Oils Pty Ltd) in liq v Stotter, Glendon & Ors [1998] FCA 1636

Neimann v Electronic Industries Ltd [1978] VR 431

Re Nine Entertainment Group Ltd (No 1) (2012) 211 FCR 439

Niord Pty Ltd v Adelaide Petroleum NL (1990) 54 SASR 87

QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41

Reese River Silver Mining Co v Smith (1869) LR 4 HL 64

Ship “Sam Hawk” v Reiter Petroleum Inc (2016) 246 FCR 337

Tamworth Base Hospital v Durant [2000] NSWCA 209

Titlow v Intercapital Group (Australia) Pty Ltd (1996) 65 FCR 449

Treadtel International Pty Ltd v Cocco (2016) 316 FLR 318

Yara Australia Pty Ltd v Oswal (No 2) [2013] WASCA 187
Date of hearing: 7 June 2018
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 49
Counsel for the Applicant: Mr AP Young QC with Mr P Bevilacqua
Solicitor for the Applicant: K&L Gates
Counsel for the Respondents: Mr DJ Jackson SC with Mr SJ Penrose

Continue reading Bux Global Limited v Hooke

Sign in free to access the full text

Details
AGLC
Bux Global Limited v Hooke [2018] FCA 882
Case
[2018] FCA 882
Decision Date

CaseChat Overview and Summary

Bux Global Limited brought a proceeding against Hooke, seeking a winding up order. The plaintiffs claimed to be contributories of the company, being holders of fully paid shares. The company disputed the plaintiffs' claims, asserting they were not members of the company and had not consented to their names being inserted on the share register. The primary judge dismissed the plaintiffs' application for a winding up order, leading to an appeal. The appeal court considered whether the plaintiffs had standing to seek the winding up of the company and if they qualified as contributories under s 9 of the Corporations Act 2001 (Cth). The court noted the plaintiffs claimed they were added to the register of shareholders and issued with holding certificates, but they admitted they did not consent to their names being inserted. The company argued that the plaintiffs could not satisfy the requirements of s 231(b) of the Corporations Act 2001 (Cth) for membership. The court considered the definition of "contributory" in s 9 of the Corporations Act 2001 (Cth), noting that the term "holder" was not defined. The plaintiffs submitted that the share register of the company was proof that they were holders of fully paid shares in the company and therefore contributories. The court concluded that the key issue was the meaning of the words "a holder of fully paid shares" as used in the definition of "contributory". The appeal court dismissed the application for leave to appeal the decision of the primary judge and dismissed the application for a stay of proceedings. The applicant was ordered to pay the respondents' costs.

Orders

Orders of the court

1. The application for leave to appeal the decision of the primary judge, made on 17 May 2018 in WAD644/2017, be dismissed.

2. The application for a stay of the proceedings in WAD644/2017 be dismissed.

3. The applicant pay the costs of the respondents to be assessed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

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

Two affidavits in support have been filed, as well as extensive submissions.THE PRIMARY JUDGMENT I will now refer to the decision of the primary judge in a little more detail than usual because there has been some debate about the terms and effect of the judgment (even though the appeal if any, would be from the orders, not the reasons). In the primary judge’s reasons, delivered on 17 May 2018, his Honour noted that the respondents (being the plaintiffs in that proceeding, WAD644/2017) claimed they were added to the register of shareholders and issued with holding certificates. Despite that, the company claims that the respondents are not members of the company, and the respondents themselves admit that they did not have the opportunity to consent to their names being inserted on the shareholding. It would therefore appear that they could not satisfy the requirements of s 231(b) of the Corporations Act 2001 (Cth) for membership of the company. (But that may not be an end to the matter.) The primary judge noted that the respondents sought a winding up order pursuant to s 461 of the Corporations Act, and noted, of course, that only those persons specified under s 462 of the Corporations Act may be permitted to apply to wind up a company. The question was whether the (respondents), fell into that category of persons. A possibility was foreshadowed before by the primary judge that they may seek to apply as creditors of the company. I do not propose addressing that possible future development. It was not addressed by the primary judge, nor has it been addressed by the respondents in submissions today, but the company has dealt with that possibility in written submissions. As I say, it is unnecessary to consider that possibility. The question is whether the respondents can satisfy the definition in s 9 of the Corporations Act as contributories. The primary judge set out the relevant part of s 9, noting that reliance was placed in particular by the plaintiffs as being holders of fully paid shares in the company and therefore contributions. That section relevantly provides:contributory means:(a)in relation to a company (other than a no liability company): (i)a person liable as a member or past member to contribute to the property of the company if it is wound up; and(ii)for a company with share capital – a holder of fully paid shares in the company; and(iii)before the final determination of the persons who are contributors because of subparagraphs (i) and (ii) – a person alleged to be such a contributory; and… His Honour noted that the term ‘member’ is defined in the Corporations Act, as I have mentioned, but the term ‘holder’ is not. His Honour noted that the plaintiffs say that the share register of the company is, without evidence to the contrary, proof that the plaintiffs are the holders of fully paid shares in the company and, therefore, contributories. They have been issued and hold shares, and they submit that the company cannot be heard now to say that they are not contributories when it has previously issued holding certificates to them, entered their names on the register of members and otherwise treated them as members.

Ratio Decidendi

Legal Principle Established

In the primary judge’s reasons, delivered on 17 May 2018, his Honour noted that the respondents (being the plaintiffs in that proceeding, WAD644/2017) claimed they were added to the register of shareholders and issued with holding certificates. Despite that, the company claims that the respondents are not members of the company, and the respondents themselves admit that they did not have the opportunity to consent to their names being inserted on the shareholding. It would therefore appear that they could not satisfy the requirements of s 231(b) of the Corporations Act 2001 (Cth) for membership of the company. (But that may not be an end to the matter.) The primary judge noted that the respondents sought a winding up order pursuant to s 461 of the Corporations Act, and noted, of course, that only those persons specified under s 462 of the Corporations Act may be permitted to apply to wind up a company. The question was whether the (respondents), fell into that category of persons. A possibility was foreshadowed before by the primary judge that they may seek to apply as creditors of the company. I do not propose addressing that possible future development. It was not addressed by the primary judge, nor has it been addressed by the respondents in submissions today, but the company has dealt with that possibility in written submissions. As I say, it is unnecessary to consider that possibility. The question is whether the respondents can satisfy the definition in s 9 of the Corporations Act as contributories. The primary judge set out the relevant part of s 9, noting that reliance was placed in particular by the plaintiffs as being holders of fully paid shares in the company and therefore contributions. That section relevantly provides:contributory means:(a)in relation to a company (other than a no liability company): (i)a person liable as a member or past member to contribute to the property of the company if it is wound up; and(ii)for a company with share capital – a holder of fully paid shares in the company; and(iii)before the final determination of the persons who are contributors because of subparagraphs (i) and (ii) – a person alleged to be such a contributory; and… His Honour noted that the term ‘member’ is defined in the Corporations Act, as I have mentioned, but the term ‘holder’ is not. His Honour noted that the plaintiffs say that the share register of the company is, without evidence to the contrary, proof that the plaintiffs are the holders of fully paid shares in the company and, therefore, contributories. They have been issued and hold shares, and they submit that the company cannot be heard now to say that they are not contributories when it has previously issued holding certificates to them, entered their names on the register of members and otherwise treated them as members. The primary judge identified what he regarded as being the key issue before him in [9] of his Honour’s reasons as follows:In my view, the key issue in relation to the claim of standing based upon being a contributory lies in the meaning of the words 'a holder of fully paid shares' as used in para (a)(ii) of that definition, and, in particular, whether it is to be read as meaning a member who is a holder of fully paid shares. I should say that, in expressing the issue in those terms, I do not believe that the construction advanced for [the company] is one which requires a reading in of those words; it is merely a question of what is meant by the phrase 'a holder of fully paid shares'.