Duc v PTS Australian Distributor Pty Ltd - [2005] NSWSC 98

CITATION:
Pham Thai Duc v PTS Australian Distributor Pty Ltd [2005] NSWSC 98

HEARING DATE(S): 03/02/05

JUDGMENT DATE :

24 February 2005

JURISDICTION:
Equity Division
Corporations List

JUDGMENT OF:
Barrett J

DECISION:
Winding up order

CATCHWORDS:
CORPORATIONS - winding up - just and equitable ground - failure of corporate organs

LEGISLATION CITED:
Corporations Act 2001 (Cth) - ss.461(1)(c), (k)

CASES CITED:
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Malos v Malos (2003) 44 ACSR 511
Re Kurilpa Protestant Hall Ltd [1946] St R Qd 170
Re Yenidjie Tobacco Co Ltd [1916] 2 Ch 426
Ruut v Head (1996) 20 ACSR 160

PARTIES:
Pham Thai Duc - Plaintiff
PTS Australian Distributor Pty Limited - Defendant

FILE NUMBER(S):
SC 3596/04

COUNSEL:
Mr P.G. Carver, Solicitor - Plaintiff
Mr L.R. de Vere Tyndall - Defendant

SOLICITORS:
Star Carver & Sons - Plaintiff
Simon Diab & Associates - Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY, 24 FEBRUARY 2005

3596/04 - PHAM THAI DUC & ANOR v PTS AUSTRALIAN DISTRIBUTOR PTY LTD

JUDGMENT

1 In proceedings 3596 of 2004, Mr Pham Thai Duc, as plaintiff, seeks an order for the winding up of PTS Australian Distributor Pty Ltd (“PTS”). He and Mr Anthony Tang have been, at all material times, the only directors and only shareholders of PTS. That company is, in essence, a partnership in corporate form.

2 At the time proceedings 3596 of 2004 were commenced, there had been on foot for some time two other relevant proceedings, being 5044 of 2000 and 1889 of 2003.

3 Proceedings 5044 of 2000 were commenced by an originating process filed on 15 December 2000. A statement of claim was filed on 21 December 2001. The plaintiffs were originally PTS and Mr Tang, with Mr Pham as sole defendant. By the time the statement of claim was filed, however, Mr Tang was the sole plaintiff and the defendants were Mr Pham, PTS and a company named LYTC Pty Limited. The main relief sought by Mr Tang in those proceedings is an order that Mr Pham purchase Mr Tang’s shares in PTS. There is an alternative claim for a winding up order. There is also a claim to declaratory relief.

4 In 1889 of 2003 (commenced by statement of claim filed on 14 March 2003), Mr Pham and LYTC sued Mr Tang and PTS seeking mainly declaratory relief, but with a claim also for what was called “damages” and a claim for an order that PTS be wound up because it cannot trade profitably and is insolvent.

5 The essential background facts appear to be that PTS was formed in 1995 and commenced to carry on a grocery retailing business at Padstow; that in about 1997 it became necessary to vacate the original retail premises because of expiration of the lease; that new premises were found nearby and a lease of those premises was taken by PTS, guaranteed by Mr Pham and Mr Tang;…

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: [2005] NSWSC 98
Decision Date: 24 February 2005

CaseChat Overview and Summary

Duc brought an application against PTS Australian Distributor, seeking the winding up of the company on the basis that it was just and equitable to do so. Duc was a shareholder and director of the company. The company's operations had ceased, and there were disputes between the shareholders. Duc claimed that the company was unable to avoid losses due to the failure of its corporate organs to function effectively. PTS Australian Distributor contested Duc's application, arguing that the company was solvent and could continue its operations.

The court was required to determine whether the company was unable to avoid losses due to the failure of its corporate organs to function effectively. The court also needed to assess whether winding up the company was just and equitable. The court considered the relevant statutory provisions, case law, and the evidence presented by both parties. The court examined the relationship between the shareholders, the functioning of the company, and the prospects for the company's future operations.

The court found that the company's corporate organs had indeed failed to function effectively, leading to the company's inability to avoid losses. The court determined that winding up the company was just and equitable due to the irretrievable breakdown in the relationship between the shareholders and the failure of the company's corporate organs. The court was satisfied that the company could not continue to operate effectively and that winding up was in the best interests of the company and its shareholders. The court granted Duc's application and ordered the winding up of PTS Australian Distributor.

Orders