Shaoyong (David) Guo & Anor v Xinwei Song & Ors; In the matter of SG Capricorn Investments Pty Ltd (subject to deed of company arrangement); Dameng Developments Pty Ltd (subject to deed of company arrangement); and New Mangrove Pty Ltd (subject to a deed of company arrangement) [2018] NSWSC 12
Hearing dates:
28 and 29 November 2017; 14 December 2017 (submissions)
Decision date:
24 January 2018
Jurisdiction:
Equity - Corporations List
Before:
Black J
Decision:
The Court releases the First–Third Defendants from their undertaking as to certain funds in bank accounts; declines leave to the Plaintiffs to file the proposed Further Amended Statement of Claim in proceeding no 2015/92649; grants leave to the Plaintiffs to carry on the proceeding against the First–Third Defendants; and orders that the deed of company arrangement executed by the First–Third Defendants in proceeding no 2017/346899 be terminated, that those companies be wound up and that the deed administrators be appointed as liquidators.
Catchwords:
CIVIL PROCEDURE — Originating process — Amendment – where amendment late and would delay trial – where no adequate explanation of delay in making amendments – whether new claims proposed to be introduced reasonably arguable
CORPORATIONS — Voluntary administration — Deed of company arrangement – Application to set aside resolutions authorising entry into deed of company arrangement – where resolutions were passed on the voices without poll – whether passage of resolutions depended on votes of related party creditors where no poll taken
CORPORATIONS — Winding up – Application that deed of company arrangement be terminated and companies be wound up – where companies’ payment of money and potential claim against payee require investigation – whether deed of company arrangement would provide better return to creditors than winding up – who should be appointed as liquidators
CORPORATIONS — Winding up — Proceedings against company – Application for leave to proceed – where adjudication of Plaintiffs’ claim as proof of debt would turn on disputed oral representations – where proceedings will determine whether companies have claims against other Defendants
CIVIL PROCEDURE — Application by companies for release from undertaking not to dispose of assets – where companies placed in administration after undertaking given – where entitlement to assets disputed in litigation
[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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AGLC
Guo v Song [2018] NSWSC 12
Case
[2018] NSWSC 12
Decision Date
CaseChat Overview and Summary
In the matter of Guo v Song, the respondents, Guo and others, sought various orders in relation to the companies in which they held interests. The applicants, Song and others, opposed the applications. The dispute centred on the administration of the companies, the validity of certain resolutions, and the potential winding up of the companies. The court had to decide whether to allow the late amendments to the originating process, the validity of the resolutions passed without a poll, the merits of setting aside the deed of company arrangement, and the appointment of liquidators.
The court first addressed the issue of late amendments to the originating process. The respondents sought to introduce new claims late in the proceedings without adequate explanation for the delay. The court held that the amendments were not reasonably arguable and would unduly delay the trial. Therefore, the court refused to allow the late amendments.
Next, the court examined the validity of the resolutions authorising the entry into a deed of company arrangement. The resolutions were passed on the voices without a poll. The court had to determine whether the passage of the resolutions depended on the votes of related party creditors. Given the lack of a poll, the court found that it could not ascertain whether the resolutions were properly passed. Consequently, the court set aside the resolutions and the deed of company arrangement.
The court also considered the application to terminate the deed of company arrangement and wind up the companies. The court had to decide whether the deed of company arrangement would provide a better return to creditors than winding up. The court found that the companies' payment of money and potential claims against the payee required further investigation. Therefore, the court declined to wind up the companies and ordered further investigation into the companies' financial affairs.
Finally, the court addressed the application for leave to proceed with proceedings against the companies. The adjudication of the plaintiffs' claim as proof of debt would turn on disputed oral representations. The court had to decide whether the proceedings would determine whether the companies had claims against the other defendants. The court found that the proceedings were necessary to determine the companies' liabilities and appointed liquidators to investigate the matter further. The court ordered the companies to release certain assets from the undertaking not to dispose of them.