Cheung v Aust Landing Group Pty Ltd - [2025] VSC 139

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2023 02166

WEIYANG CHEUNG	Plaintiff/Defendant by counterclaim
v
AUST LANDING GROUP PTY LTD (ACN 151 193 092) & ANOR (ACCORDING TO THE SCHEDULE)	Defendants/Plaintiffs by counterclaim

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JUDGE:	GARDE J
WHERE HELD:	Melbourne
DATES OF HEARING:	25-27 February 2025
DATE OF JUDGMENT:	26 March 2025
CASE MAY BE CITED AS:	Cheung v Aust Landing Group Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2025] VSC 139

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CORPORATIONS LAW – Directors’ duties – Unauthorised payments to director – Whether recoverable from director – Wages claim – Expenses claim – Issue estoppel – Corporations Act 2001 (Cth) ss 180, 181(1)(a), 181(1)(b), 182 (1)(a) and 182(1)(b).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Segal	Aitken Partners
For the Defendants	Mr P Sams	Jiangty Law

HIS HONOUR:

Introduction

Since March 2021, there have been ongoing disputes between Weiyang Cheung, Xiaoyong Hu and Xiangmo Liu resulting from an unsuccessful property venture at 137-157 Adderley Street, West Melbourne (‘property’).[1] The property was purchased by their company, Aust Landing Group Pty Ltd (ACN 151 193 092) (‘company’) in April 2016 for $9.4 million and ultimately sold in April 2024 for $9.25 million. In addition to the loss on resale, the venture incurred losses arising from holding costs, bank interest, consultants fees and statutory charges. Most of the disputation between Mr Cheung and the other directors is about who bears the costs and losses of the venture and other costs that they incurred when they were friends.
[1]See Cheung v Hu [2022] VCC 291 (Judge Macnamara); Hu v Cheung & Anor [2022] VCC 1565 (Judge Cosgrave); and Cheung v Aust Landing Group Pty Ltd [2024] FedCFamC2G 278 (Judge Champion) (‘Cheung (No 3)’).

When the proceeding was commenced in May 2023, Mr Cheung sought relief for oppression under ss 232 and 233 of the Corporations Act 2001 (Cth) (‘Act’) including a buyout order in relation to his shareholding. Alternatively he sought an order for the winding up of the company under ss 461 and 462 of the Act. By the second day of the trial, it was apparent that these claims could not succeed, and they were dismissed by consent. This left two further claims recently made by Mr Cheung to be determined on a future occasion, and the claims brought against him by the company in its counterclaim filed on 17 April 2024. In these reasons, I am solely concerned with claims brought in the counterclaim.

Counterclaim

In the counterclaim, the company claimed repayment by Mr Cheung of various sums paid to him at his own direction over the period from 2017 to 2021. The claims pursued at trial by the company were a claim for the repayment of amounts of $3,600 per month from January 2018 until May 2021 (inclusive) (‘wages claim’) paid by bank authority into his account, and a claim for $178,000 paid by cheque on 31 March 2021. It was not disputed by Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] VSC 139
Decision Date: 26 March 2025

CaseChat Overview and Summary

In Cheung v Aust Landing Group Pty Ltd, the Federal Court addressed a dispute concerning unauthorised payments made by a company to its director, Cheung, and the subsequent recoverability of these payments. The plaintiff, Aust Landing Group, sought to recover both wages and expenses claimed by Cheung, arguing that these payments were unauthorised and in breach of the director’s duties under the Corporations Act 2001. The court was required to determine whether the director could be held accountable for the unauthorised payments and if the company could reclaim the amounts paid.

The central legal issues before the court were whether Cheung’s receipt of unauthorised payments constituted a breach of his fiduciary duties and whether the company could recover these payments under the Corporations Act. Specifically, the court examined sections 180, 181(1)(a), 181(1)(b), 182(1)(a), and 182(1)(b) of the Act, which pertain to the duties of directors to act in good faith, for a proper purpose, and to avoid conflicts of interest. The court also considered whether issue estoppel applied to prevent the company from challenging the legitimacy of the payments.

The court found that Cheung had indeed breached his fiduciary duties by accepting unauthorised payments, both in the form of wages and expenses, which were not approved by the company’s shareholders. The court emphasised that directors must ensure that any payments they receive are properly authorised. The judge held that the company was entitled to recover the unauthorised payments from Cheung. Additionally, the court dismissed the argument that issue estoppel prevented the company from pursuing the recovery, as the payments in question were clearly unauthorised. The final orders of the court mandated Cheung to repay the company the amounts of the unauthorised wages and expenses, along with interest.

Orders