Cui v Li
[2001] NSWSC 90
•23 February 2001
CITATION: Cui v. Li & Ors. [2001] NSWSC 90 CURRENT JURISDICTION: Equity Division FILE NUMBER(S): SC 1220/01 HEARING DATE(S): 23/02/01 JUDGMENT DATE:
23 February 2001PARTIES :
Jie Cui - plaintiff
Gang Li - defendant
Weiland Pacific Imports Pty. Ltd. - 2nd defendant
Great C. Holdings Pty. Ltd. - 3rd defendant
El-Cheapos Pty. Ltd. - 4th defendantJUDGMENT OF: Hodgson CJinEq at 1
COUNSEL : Mr. C. Freeman for plaintiff
Mr. I. Serisier for 1st defendantSOLICITORS: Maggie Wong & Associates, Solicitors, Hurstville for plainitff
Di Lizio & Associates, Solicitors, Hurstville for 1st defendantCATCHWORDS: CORPORATIONS - FAMILY LAW - Husband and wife shareholders and directors of corporation - Matrimonial proceedings in Family Court concerning property, including shareholding - Wife commences proceedings in Supreme Court for access to company records and for oppression - Whether a matrimonial cause - Whether stay should be granted. LEGISLATION CITED: Family Law Act 1975 (Cwth), ss.4, 114 DECISION: See end of judgment
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORAM: HODGSON, CJ in Eq.
Friday 23rd February 2001
NO. 1220 OF 2001
CUI V. LI & ORS.
JUDGMENT
1 These proceedings concern three companies which I will call Weiland, Great C and El-Cheapos. The plaintiff and the first defendant are the only shareholders of Great C, and Great C in turn owns all the shares in Weiland and El-Cheapos. The plaintiff and first defendant are the only directors of all three companies.
2 In the proceedings, the plaintiff seeks relief in relation to alleged oppression of her as a shareholder of Great C, and also seeks, essentially in her capacity as director of all three companies, access to the financial records of those companies, and authorisation for an accountant to inspect those financial records.
3 There are proceedings in the Family Court between the plaintiff and the first defendant, and the first defendant has brought an application in these proceedings seeking that they be either dismissed for want of jurisdiction, or alternatively stayed pending the outcome of the Family Court proceedings.
4 The parties were apparently married in 1989. It appears that there was an order for dissolution of the marriage made in about 1992 by the Family Court, although the plaintiff is challenging that order on the ground that she was not served with process. There have been extensive interlocutory proceedings in the Family Court, and a number of orders have been made concerning the property of the plaintiff and the defendant, and also dealing with the conduct of the parties, and in particular the first defendant, in relation to the three companies that are the subject of these proceedings.
5 The basic contention of the first defendant in his application is that this Court does not have jurisdiction to entertain these proceedings, because they are a ‘matrimonial cause’ within the meaning given to those words in s.4 of the Family Law Act 1975, and accordingly, the Family Court has exclusive jurisdiction. The alternative submission is that even if this Court has jurisdiction, nevertheless the plaintiff has initiated proceedings dealing with the same dispute in the Family Court, and sought and obtained extensive orders in those proceedings, and accordingly, particularly since the Family Court is able to deal with the whole of the dispute between the plaintiff and the first defendant, these proceedings should be stayed. To permit them to go ahead would be an abuse of process, and would be oppressive as against the first defendant.
6 I have been provided with extensive written submissions by both parties, and I will not recount them in this judgment.
7 Mr. Serisier for the first defendant has submitted that these proceedings are ‘proceedings between the parties to a marriage with respect to the property of the parties to the marriage’ within par.(ca) of the definition of ‘matrimonial cause’ in s.4 of the Family Law Act, that property being the shareholding of the parties in Great C, and their consequent derivative interest in Weiland and El-Cheapos. In response to a contention that the plaintiff was, in these proceedings, seeking the assistance of the Court in order to discharge her duties as a director of the three companies, Mr. Serisier submitted that it was open to the first defendant to resign as a director, and thereby free herself of those duties, and that the Family Court had full jurisdiction to make orders which would assist her in fulfilling her duties. He referred me to s.114(1) of the Family Law Act, and submitted that that gave ample power in the Family Court to make such orders, and also gave power to that Court, if necessary, to make orders affecting the exercise of fiduciary duties of persons in the position of a director.
8 In my opinion, in so far as these proceedings are proceedings brought by a director of companies, who claims to be unable to fulfil the obligations of a director because of lack of access to the books and records of a company, the proceedings are not fairly characterised as proceedings between the parties to a marriage with respect to the property of those parties. Rather, they are proceedings with respect to the fulfilment of a director’s obligations.
9 A director of a company has obligations and responsibilities to regulatory authorities and to creditors of the company, not merely to their shareholders. The ability of a director to fulfil the onerous obligations imposed by the Corporations Law is therefore not just a matter, in a case such as this, between one shareholder/director and another shareholder/director. The Supreme Court has jurisdiction in relation to corporations, and in relation to the performance of the duties of directors of corporations; and to invoke that jurisdiction in order to be able to fulfil those duties is clearly, in my opinion, not a matrimonial cause.
10 For those reasons, I do find that this Court has jurisdiction in relation to so much of the application as relates to orders for access to financial records, and other orders directed to making it possible for the plaintiff as a director of the three companies to carry out her functions as a director.
11 The situation in relation to the oppression relief is not so clear. The oppression relief is based on the provisions of the Corporations Law, and oppression relief is granted on Corporations Law principles. However, the proceedings do relate to property, namely shares, and the ultimate relief is not dissimilar to relief that might be obtained as between husband and wife in Family Court proceedings.
12 I am of the view that the proceedings for oppression should be stayed for the time being in any event, because I think they are proceedings in which very similar relief is sought to that being sought in the Family Court, and in which the evidence and issues on the basis of which the relief might be granted is very similar. I think it would be oppressive on the defendant to face two sets of proceedings with that degree of similarity. Since I take that view, I do not think it necessary for me to come to a final view on the question of jurisdiction.
13 In relation to whether the other aspect of the proceedings should be stayed, it seems to me that, although it is possible that relief of a similar kind might be granted by the Family Court, the Family Court, in considering such relief, would be acting on more general principles of fairness between husband and wife, whereas this Court would be focussing particularly on the obligations of directors, and what it is necessary for directors to have in order to fulfil those obligations. It seems to me also that there is a public interest in directors being able to perform their obligations, and that it is in that public interest for this Court to receive applications such as this and to deal with them expeditiously.
14 For those reasons, I would not propose to stay so much of the application as relates to assistance sought by the plaintiff in order to fulfil her obligations as a director.
15 The matter was stood over to today so that the question of jurisdiction and stay could be argued. Mr. Freeman has asked that the Court now proceed to determine the matters which have not been stayed. Mr. Serisier has asked for an adjournment, on the basis that the matter was not set down today for that purpose, and that his client is overseas until 28th February 2001. I think it appropriate to grant an adjournment until 7th March 2001. I will note that the plaintiff’s evidence in support of that aspect of the relief is complete, and I will direct that any further evidence to be relied on by the first defendant be filed and served on or before 5th March 2001.
16 I would note, as I have attempted to make clear in the judgment, that the issue which the Court will be addressing on 7th March 2001 is what assistance should be given to the plaintiff as a director of these three companies to fulfil her obligations, including the statutory obligations under the Corporations Law, in relation to those companies. Except in so far as the Family Court proceedings impact on that question, it seems to me that the issues in the Family Court, and what has happened in the Family Court, will not be relevant to the questions to be determined by this Court.
17 Mr. Serisier submits that the applicant has had some success in these proceedings, and that the appropriate order would be to reserve costs.
18 I think the question of costs should be determined now. Although the first defendant has had some success, essentially this application was brought with a view to bringing these proceedings to an end. I think the appropriate order is that the first defendant pay one-half of the plaintiff’s costs of this application.
19 I stay further proceedings in relations to Orders 2, 3 and 7 of the Originating Process until further order.
20 Otherwise I dismiss the application.
21 I order that the applicant pay one-half of the plaintiff’s costs of the application.
22 I stand the proceedings over to 7th March 2001.
23 I note that on that day, the plaintiff will be seeking Orders 5 and 6. I note that the plaintiff’s evidence in support of Orders 5 and 6 is complete.
24 I direct that any further evidence to be relied on by the first defendant in relation to those orders be filed and served on or before 5th March 2001.
25 The exhibits may be returned.
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