Hotien Holdings Pty Ltd v Frits Mar* & 2 Ors

[2007] NSWSC 599

Reported Decision: (2007) 25 ACLC 854

New South Wales

Supreme Court

CITATION:	Hotien Holdings Pty Ltd v Frits Maré & 2 Ors [2007] NSWSC 599
HEARING DATE(S):	17 & 18/05/07
JUDGMENT DATE :	22 May 2007
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	22 May 2007
DECISION:	2nd defendant's interlocutory process dismissed.
CATCHWORDS:	CORPORATIONS – Directors – Meetings – Resolutions – Articles of Association provide quorum for directors meeting as two – Appointment of directors – Whether resolution appointing directors validly made – Where conversation between directors indicates that directors intended that appointment would be made in the future - No concurrence by two directors that appointment of new director made – Held that no valid appointment of new directors. - CORPORATIONS – Shares – Issue and allotment of shares – Powers of directors – Issue and allotment of shares invalid because no valid appointment of directors purporting to resolve to issue shares – Where even if appointment of directors had been made, issue of shares for purpose of securing majority voting power not a bona fide exercise of power – Ulterior purpose – Held that issue and allotment of shares invalid. - CORPORATIONS – Directors – Allegation that director unable to act as director due to mental incapacity – Onus of establishing incapacity not discharged. - CORPORATIONS – Application under s 241 of the Corporations Act 2001 (Cth) to appoint receiver or accountant to investigate financial affairs of company – Standing to make application. - (Cth) Corporations Act 2001, ss 237, 241, - (NSW) Guardianship Act 1987, ss 14 and 25G
LEGISLATION CITED:	Corporations Act 2001 (Cth) Guardianship Act 1987 (NSW)
CASES CITED:	Massoud v NRMA Insurance (2005) 62 NSWLR 653 Blanch & Ors v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653 Swiss Screens (Australia) Pty Ltd v Burgess (1987) 11 ACLR 756; 5 ACLC 1,076 Roden v International Gas Applications (1995) 18 ACSR 454 Poliwka & Anor v Heven Holdings Pty Ltd & Ors (1992) 6 WAR 505 Poliwka & Anor v Heven Holdings Pty Ltd (1992) 8 ACSR 747 Re East Norfolk Tramways Co (Barber’s Case) [1877] 5 Ch D 963 Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285
PARTIES:	Hotien Holdings Pty Ltd v Frits Maré & 2 Ors
FILE NUMBER(S):	SC 1614/07
COUNSEL:	Plaintiff: N Bearup Defendants: D L Cook
SOLICITORS:	Plaintiff: Deacons 1st Defendant: Church & Grace 2nd Defendant: Henry Davis York

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

WHITE J

Tuesday, 22 May 2007

1614/07 Hotien Holdings Pty Ltd v Frits Maré & 2 Ors

JUDGMENT

1 HIS HONOUR: This is an application by Hotien Holdings Pty Limited for a declaration that the second and third defendants were not validly appointed as directors of Hotien Holdings, and for a declaration that a purported issue of 600 shares in Hotien Holdings on or about 2 January 2007 and the allotment of those shares to the second defendant is invalid. The plaintiff seeks consequential relief.

2 On 26 February 2007, Barrett J gave leave to Mr Raymond Lord to commence the proceedings on behalf of Hotien Holdings.

3 Hotien Holdings was established as an investment company.

4 Prior to 2 January 2007, it had issued 500 shares. 498 shares are held by Coral Property Holdings Pty Ltd, a company incorporated in Jersey. Although the evidence as to Raymond Lord's holdings in Coral Property Holdings Pty Ltd is not at all clear, it appears that it is a company he controls.

5 Raymond Lord also held one share in Hotien Holdings. His ex-wife, Beverly Anne Lord, also held one share, but she executed a transfer of that share in favour of Raymond Lord as part of the divorce settlement in 1997.

6 Prior to 31 December 2006, there were two directors of Hotien Holdings. They were Raymond Lord and a Mr Frits Maré. Mr Maré was a friend and business acquaintance of Raymond Lord.

7 There is an issue as to whether Raymond Lord had automatically ceased to be a director by reason of mental incapacity. The company secretary of Hotien Holdings is Mr Colin Lord. He is Raymond Lord's brother.

8 On 31 December 2006, at a meeting styled as a meeting of directors of Hotien Holdings, Mr Maré purported to appoint the second defendant, Mr Alan Lord, and the third defendant, Mr Martyn Clapp, as directors of Hotien Holdings. Alan Lord is the son of Raymond Lord by his first wife, Gabrielle Lord.

9 Raymond Lord deposed in his affidavit that he had had no notice of the meeting at which Alan Lord and Martyn Clapp were purportedly appointed as directors of Hotien Holdings. He deposed that he had had no notice of any meeting to approve of the issue and allotment of shares in Hotien Holdings to Alan Lord. He deposed that he did not consent to any resolution to appoint Alan Lord or Martyn Clapp as directors, or to issue and allot additional shares to Alan Lord.

10 The effect of the share issue to Alan Lord, if valid, would be to give him control of Hotien Holdings. The 600 shares were purportedly issued for $1 each.

11 The evidence suggests that the company has substantial investments.

12 The first defendant, Mr Maré, and the third defendant, Mr Clapp, entered submitting appearances.

13 The second defendant, Alan Lord, ultimately did not attempt to support the validity of the purported share issue.

14 The catalyst of the present dispute is that Raymond Lord is suffering from terminal cancer.

15 In February 2007, he arranged for his "interest" in Coral Property Holdings Pty Ltd, (whatever that might be), to be transferred to his son, Dr Breck Lord. Breck Lord is the son of Raymond Lord by his second wife Beverley Anne Lord. Raymond Lord is divorced from both of his wives.

16 Late last year Beverley Anne Lord came to Australia to provide assistance and support to Raymond Lord.

17 A strong undercurrent of the case is that Alan Lord believes that Beverley Anne Lord and perhaps Breck Lord are influencing Raymond Lord in relation to both his testamentary and inter vivos disposition of his assets.

18 Raymond Lord exhibited to his affidavit what he said was a true copy of the constitution of Hotien Holdings. He deposed that he was not aware of any amendments having been made to any aspect of its constitution. He exhibited a Memorandum and Articles of Association of the company as at 12 April 1983. Those Articles provide a quorum for a directors meeting as two.

19 It was proved by Alan Lord that the Articles of Association of Hotien Holdings were replaced at the general meeting of the company held on 18 August 1997. The meeting was attended by a solicitor, Mr Mathers, as proxy for Beverley Anne Lord, and a Mr Johnson under Power of Attorney for the trustee in bankruptcy of Raymond Lord. The new Articles also provide that the quorum for a directors meeting is two. They also provide that the office of the director becomes vacant if the director cannot act as a director because of the director's mental incapacity.

20 If the number of directors is insufficient to constitute a quorum, the remaining director may act only for the purpose of increasing of the number of directors to a number sufficient to constitute a quorum or convening a general meeting of the company.

21 Counsel for Alan Lord submitted that the onus lay on the plaintiff to show that Raymond Lord had not ceased to be a director by reason of mental incapacity, such that Mr Maré had authority as the sole remaining director to appoint Alan Lord and Martyn Clapp as directors.

22 Mr Maré gave oral evidence to the effect that Raymond Lord instructed him in September 2006 to appoint Alan Lord as a director. Mr Maré said that in September 2006, Raymond Lord said to him that there were only two directors and that Alan Lord should be appointed to the Board as another family member in case something should happen to him.

23 Mr Maré said that on 1 December 2006, he delivered a letter to Raymond Lord whom he visited almost daily at that time. He produced the letter which reads as follows:

“Dear Ray, re appointment of further director - Hotien Holdings Pty Ltd. In line with your request to appoint your son Alan as director of Hotien Holdings I have spoken with your brother Colin's solicitor who is the company secretary and he has asked me to prepare the paperwork. I will meet Colin on 31 December 2006 at 11 at the Sun Zappa office to formalise the appointment".

24 Mr Maré appended a handwritten note to his copy of the letter which reads:

“ Handed to Ray 1.12.06 at 16.30. ”

25 He said that Raymond Lord handed the letter to Breck to who put it with Ray's files next to his computer.

26 Breck Lord denied that the letter was delivered.

27 Mr Maré gave evidence that he attended a meeting with Colin Lord on 31 December 2006. He prepared a minute of the meeting as follows:

“ MINUTES OF MEETING OF DIRECTORS OF HOTIEN HOLDINGS PTY LIMITED HELD AT 8/32 CAMPBELL AVENUE DEE WHY ON THE 31ST DAY OF DECEMBER 2006
Present Frits Maré
Colin Lord
Business Appointment of additional directors to the Company
It was noted that the meeting commenced at 11:00 am but that Mr Raymond Lord was not present. The meeting was kept open until 11:30 am and it was noted that Mr Raymond Lord had not turned up nor had he communicated with the Company Secretary of Director.
It was noted that Mr Maré had called this meeting at the request of Mr Raymond Lord for the purpose of appointing Mr Alan Lawrence Lord , Mr Raymond Lord’s oldest son, a director of the Company in accordance with Mr Raymond Lord’s specific instruction to do so. This instruction was verbally made on 30 September 2006 as a result of the fact that Mr Lord had advised that he was suffering from a terminal illness and wished to appoint another family member on the board of the company in case something should happen to him.
Having noted that adequate time had elapsed, Mr Maré took the chair and advised the meeting that due to the terminal illness of Mr Raymond Lord it would be prudent for the Company to appoint 2 further directors and that in this respect he had ‘Consents to Act’ from both Mr Alan Lawrence Lord and from Mr Martyn John Clapp a trusted acquaintance from his time in Silverwater goal. (sic)
It was resolved to appoint Mr Alan Lawrence Lord a director of Hotien Holdings Pty Limited
It was resolved to appoint Mr Martyn John Clapp a director of Hotien Holdings Pty Limited
Mr Maré was instructed to lodge the relevant ASIC documentation advising the ASIC of the appointments.
Signed as a correct record of the proceedings of the meeting. "

28 On the same day, Alan Lord and Martyn Clapp signed a Consent to Act as Director of Hotien Holdings.

29 There is a clear conflict between the evidence of Mr Maré, and the documents he produced, and the evidence in Raymond Lord’s affidavit.

30 It is hard to decide the disputed questions as to whether Raymond Lord gave instructions to Mr Maré as Mr Maré deposed to, and whether Mr Maré delivered the letter of 1 December 2006 to Raymond Lord, because Raymond Lord was not cross-examined.

31 Normally, the failure to cross-examine would entail acceptance of Raymond Lord's evidence. Raymond Lord was not able to attend Court. His counsel said he could be cross-examined at his home.

32 Through his counsel, Alan Lord said that he did not want to subject his father to such cross-examination.

33 There was medical evidence that Raymond Lord already suffers from partial paralysis of his vocal cords. There is evidence that by today, which is the day his evidence would have otherwise been taken, there would be a significant chance that Raymond Lord would have great difficulty in speaking. He also has impaired breathing, impaired speech and impaired swallowing. He was recently admitted to hospital with severe aspiration pneumonia which could recur in the immediate future.

34 In these circumstances, it is quite proper that Raymond Lord should not be subjected to cross-examination, although his legal representatives said he was prepared to be cross-examined. That assertion was not put to the test. Alan Lord cannot be criticised for not seeking to have his father cross-examined.

35 However, that does make it more difficult than in the usual case to decide the disputed questions of fact.

36 Having had the benefit of seeing both Breck Lord and Mr Maré cross-examined, I prefer the evidence of Mr Maré on the question of whether the letter of 1 December 2006 was delivered. Mr Maré is a disinterested witness. So far as the evidence reveals, he has nothing to gain or lose by the outcome of this litigation. He holds no shares in Hotien Holdings. He was a friend of Raymond Lord for twenty-three years. Raymond Lord's confidence in him is attested by the fact that he was appointed as director of Hotien Holdings.

37 Whilst Raymond Lord was not cross-examined, the reasons for that have been explained.

38 Mr Maré was not shaken in cross-examination.

39 Raymond Lord's evidence in his affidavit has been shown to be wrong in a material respect, namely, as to what are the Articles of Association of Hotien Holdings.

40 In these circumstances, and where, so far as appears, Mr Maré is not jostling for a share of Raymond Lord's estate, (an observation which cannot be made about the other witnesses), I accept Mr Maré's evidence that in September 2006, he was instructed by Raymond Lord to appoint Alan Lord as a director of Hotien Holdings. I also accept his evidence that he delivered the letter of 1 December 2006.

41 Those findings do not resolve the question of whether Alan Lord and Martyn Clapp were validly appointed as directors.

42 Mr D Cook of counsel, who appeared for Alan Lord, submitted that the plaintiff should fail because the plaintiff had sought to prove a case based on the 1983 Articles of Association. It was proved that those Articles of Association had been replaced. He submitted that it was incumbent on the plaintiff to prove that the 1983 Articles were the current Articles, and also to prove the absence of any facts which would give rise to a valid appointment of Alan Lord as a director under whatever might be the current Articles.

43 I was referred to the decision of McLelland CJ in Eq in Massoud v NRMA Insurance (2005) 62 NSWLR 653 at 657, applied by Young CJ in Eq in Blanch & Ors v British American Tobacco Australia Services Ltd (2005) 62 NSWLR 653.

44 In Massoud, McLelland CJ in Eq said (at 660):

“In the case of relief by way of declaratory order, the precise terms of the declaration assume particular significance in that (subject to any relevant presumption) the party seeking the declaration has the burden of proof of any matter which is a necessary element of the declaration sought (even if in proceedings by that party for relief of another kind, or in proceedings by the other party, that matter would not arise unless raised (and the burden of proof consequently assumed) by the other party)."

45 In Blanch, Young CJ in Eq said (at 653 ([5]-[6]):

“ [5] However, the problem that has caused me the most worry in this case is questions of evidence and onus. Declaratory proceedings are separate and discrete proceedings, and when a person commences declaratory proceedings that person bears the legal onus of proof, and that is so even though themajority of the facts may be in the opposing camp.
[6] The onus is on the plaintiff to establish the ambit of the rights to be declared and to prove all the facts necessary to enable the declaration to be made. See Decca Pty Ltd v City of Adelaide (1982) 52 LGRA 85 at 95, applying Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 212. Thus in an application for a declaration that land is not restricted by a covenant, the onus is on the plaintiff to prove that it is not so affected. It is not on the defendant to prove that it is affected: Re 6, 8, 10 and 12 Elm Avenue, New Milton; Ex parte New Forest District Council [1984] 1 WLR 1398; [1984] 3 All ER 632. "

46 The plaintiff is seeking to prove a negative, namely, the invalidity of the appointments of the second and third defendants as directors. The onus is on it to show there was no valid resolution of directors for their appointment.

47 Prima facie, the plaintiff discharged that onus by proving that the Articles of Association of Hotien Holdings as at 1983 require a quorum of two directors for such a resolution.

48 Proof of those Articles was rebutted by the second defendant's proof that the Articles had been changed in 1997. However, the 1997 Articles also required a quorum of two directors unless the number of qualified directors had fallen below two. Neither party sought to demonstrate that the 1997 Articles had been replaced. The presumption of continuance applies.

49 As the 1997 Articles apply, unless Raymond Lord had ceased to be a director because of mental incapacity, the resolution of 31 December 2006 appointing Alan Lord and Martyn Clapp as directors is prima facie invalid for want of a quorum. The onus of establishing that Raymond Lord had ceased to be a director by reason of mental incapacity lay on the party asserting that fact, namely Alan Lord. That onus was not discharged.

50 Whilst there was evidence of Raymond Lord's physically weakened state, there was little evidence that his mental capacity was affected by his physical condition.

51 The evidence adduced by Alan Lord suggested that such an inference could be drawn from Raymond Lord’s change of attitude towards Alan Lord, from that which he had expressed to Mr Maré in September 2006. Alan Lord also led evidence of Raymond Lord's being angry towards him because of a letter he claimed Alan Lord had written, whereas Alan Lord denied ever having written such a letter.

52 These matters are not evidence, let alone proof, of mental incapacity. If Alan Lord's evidence is correct, they may show that Raymond Lord is acting under a mistake or misapprehension, or under the influence of Beverley Anne Lord, but they do not prove mental incapacity.

53 Mr Maré dealt with Raymond Lord up to just before Christmas in 2006. He dealt with him on the basis that he thought Raymond Lord might join the meeting of 31 December 2006 by telephone. That is only consistent with his assuming that Raymond Lord had the mental capacity to act as a director.

54 Mr Maré and apparently Colin Lord and Alan Lord were concerned that Raymond Lord was then being subjected to undue influence by Beverley Anne Lord, or perhaps her son, or both.

55 Mr Maré gave evidence that he told Alan Lord on 2 January 2007 that Colin Lord had suggested that they issue another 600 shares so that the company could not be dealt with and the directors could not be removed. In this way, the company's affairs would be put into suspension. Alan Lord gave evidence that Mr Maré proposed the shares be allotted to Alan Lord to "protect the company's assets from Bonnie", and that allotting a majority shareholding to Alan Lord would block Beverley Anne Lord from procuring Raymond Lord's removal of Alan Lord and Martyn Clapp as directors.

56 The fact that Mr Maré, Colin Lord and apparently Alan Lord held such concerns is not evidence that Raymond Lord was suffering mental incapacity that prevented his acting as a director.

57 Accordingly, the number of directors as at 31 December 2006 remained at two.

58 Article 49.2 of the 1997 Articles confers power on a director at any time to appoint any person to be a director either to fill a casual vacancy or as an addition to the existing directors, but so that the total number of directors does not at any time exceed the number fixed in accordance with the Articles.

59 The question then is whether there may have been an informal exercise of the powers of the directors under Article 49.2 for the appointment of Alan Lord as a director.

60 There is no evidence of Raymond Lord’s giving instructions to Mr Maré for the appointment of Martyn Clapp as a director.

61 In Swiss Screens (Australia) Pty Ltd v Burgess (1987) 11 ACLR 756; 5 ACLC 1,076, Bryson J (as his Honour then was) said:

“To my mind any event, even most fleeting, in which two directors who are married to each other and are the company's only directors reach concurrence in taking some course in the company's affairs can be part of their management of the business of the company, and can be described with accuracy as a meeting of the directors and as a proceeding at such a meeting. In the course of human affairs it is not to be expected that a recognisable meeting would often take place in which somebody took the chair, there was a call to order, a resolution was made, seconded, debated and voted on. What does seem to me to be essential is that they should both concur in some decision in the management of the business of the company." (at 758; 1,077-1,078).

62 This passage was cited with approval by McLelland CJ in Eq in Roden v International Gas Applications (1995) 18 ACSR 454. His Honour added (at 456) that the principle was not confined to directors who are married to each other. His Honour referred to a statement by Rowland J in Poliwka & Anor v Heven Holdings Pty Ltd & Ors (1992) 6 WAR 505 that:

“ I think there must at least be an intention that the occasion be a directors' meeting and an awareness by the persons present that they are concurring, in their capacity as directors, in the management of the affairs of their company ."

McClelland CJ in Eq added:

“That statement may well have been entirely adequate for the purposes of dealing with the facts in Poliwka, but there is in my respectful opinion some danger in imposing unnecessary rigidity in adopting rules of that kind as having literal and universal application. In the present case, so far as execution of deed of charge by IGA is concerned, it was sufficient to constitute an effective decision of the directors of IGA that both directors were together, and concurred and participated in the affixing of the common seal to that document."

63 In Poliwka & Anor v Heven Holdings Pty Ltd (1992) 8 ACSR 747, Ipp J, when a member of the Full Court of the Supreme Court of Western Australia, said (at 785-786):

“A valid resolution of directors can be taken at an informal meeting; there must, however, at least, be a demonstrable expression of will, on the part of the directors, approving of the resolution. As was said by Sir James Bacon VC in Re Bonelli's Telegraph Co (Collie's (Claim) (1871) 12 LR Eq 246 at 258:

If you are satisfied that the persons whose concurrence is necessary to give validity to the act did so concur, with full knowledge of all that they were doing, in my opinion the terms of the law are fully satisfied …


See also Re Great Northern Salt and Chemical Works; Ex parte Kennedy [1890] 44 Ch D 472 at 480–1.

Moreover, while it may not be necessary for a director consciously to apply his or her mind to the fact that the decision is being taken at a meeting of directors, the concurrence with the resolution must be expressed by each director in that capacity, and for the purpose of resolving, as a director, upon affairs of the company: Re East Norfolk Tramways Co (Barber's Case) [1877] 5 Ch D 963 at 966– 7.”

64 Thus, in Re East Norfolk Tramways Co (Barber’s Case) [1877] 5 Ch D 963, the concurrence of five out of six directors at a meeting of shareholders to the appointment of another person as a director did not satisfy the requirements of eligibility for the appointment, that the appointee be recommended by the Board.

65 Whilst directors may meet informally and may meet by communicating with each other, although they are not physically in each other's presence so that there is a meeting of minds, rather than a meeting of persons, and whilst their concurrence in the management of the business of the company can be expressed informally, nonetheless there must still be a concurrence in doing things in their capacity as directors and in the management of the company's affairs.

66 In the present case, Mr Maré and Raymond Lord did not in September 2006 concur informally in the appointment of Alan Lord as a director conditionally on his signing a consent to act. They then anticipated that such an appointment would be made in the future. Mr Maré was instructed to do what was necessary for that purpose. They did not purport at that time to make a conditional appointment.

67 A further resolution of directors, however informal, was needed for Alan Lord to be appointed as a director. That was what Mr Maré sought to proceed to do. Until such a resolution was made, Raymond Lord was free to change his mind. His concurrence in the resolution to appoint Alan Lord as a director and Martyn Clapp as a director was needed. He did not concur in those appointments at the time the appointments were purportedly effected.

68 Accordingly, the resolution of 31 December 2006 was invalid.

69 It follows that the resolution to issue 600 shares to Alan Lord was also invalid. That resolution was purportedly passed at a directors' meeting attended by Mr Maré, Alan Lord and Martyn Clapp. Only Mr Maré was a director and he could not effect that resolution himself.

70 In any event, under the 1997 Articles, no further shares could be issued or allotted without the consent of each person who was a member of the company (Article 3.5).

71 Even if there were not these problems, the resolution would be invalid because it was effected for the purpose of securing a majority voting power in favour of Alan Lord so as to prevent the existing members from exercising their voting powers. Such a purpose is foreign to the purpose for which the power to issue shares is conferred. Such an exercise of power is invalid no matter how altruistic might be the motives of those involved (Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 290, 293).

72 As I have said, it was conceded that the share issue was invalid.

73 It follows that the plaintiff is entitled to the relief sought in the summons and to ancillary relief.

74 The second defendant filed an interlocutory process seeking the appointment of a receiver to Hotien Holdings. Alternatively, he sought the appointment of an accountant to investigate the affairs of Hotien Holdings and to investigate, with the assistance of a medical practitioner, whether Raymond Lord is able to discharge his duties as a director.

75 The relief was claimed pursuant to s 241 of the Corporations Act 2001 (Cth). The proceedings were commenced by leave given under s 237. Section 241 provides:

“ 241 General powers of the Court
(1) The Court may make any orders, and give any directions, that it considers appropriate in relation to proceedings brought or intervened in with leave, or an application for leave, including:
(a) interim orders; and
(b) directions about the conduct of the proceedings, including requiring mediation; and
(c) an order directing the company, or an officer of the company, to do, or not to do, any act; and
(d) an order appointing an independent person to investigate, and report to the Court on:
(i) the financial affairs of the company; or
(ii) the facts or circumstances which gave rise to the cause of action the subject of the proceedings; or
(iii) the costs incurred in the proceedings by the parties to the proceedings and the person granted leave.
(2) A person appointed by the Court under paragraph (1)(d) is entitled, on giving reasonable notice to the company, to inspect any books of the company for any purpose connected with their appointment.
(3) If the Court appoints a person under paragraph (1)(d):
(a) the Court must also make an order stating who is liable for the remuneration and expenses of the person appointed; and
(b) the Court may vary the order at any time; and
(c) the persons who may be made liable under the order, or the order as varied, are:
(i) all or any of the parties to the proceedings or application; and
(ii) the company; and
(d) if the order, or the order as varied, makes 2 or more persons liable, the order may also determine the nature and extent of the liability of each of those persons.
(4) Subsection (3) does not affect the powers of the Court as to costs. ”

76 As the second defendant is neither entitled to be a director nor shareholder of Hotien Holdings, and as he does not claim to be a creditor of Hotien Holdings, he has no standing under s 241 to claim the appointment of a receiver.

77 The power in s 241 is one to make interim orders in aid of the conduct of the principal proceedings. No such relief is necessary in the present case to assist in the resolution of the issues raised by the Summons.

78 Even if there were a wider power to grant the relief sought in the interlocutory process, the grant of such relief would not be appropriate. Where concerns are held as to the incapacity of Raymond Lord to manage his affairs, or to his susceptibility to the influence of others, the appropriate forum for dealing with such concerns is the Guardianship Tribunal, or this Court's parens patriae jurisdiction. The orders sought in relation to the affairs of Hotien Holdings would not be an appropriate exercise of Court's parens patriae jurisdiction.

79 The Guardianship Tribunal can make financial management orders under the Guardianship Act 1987 (NSW) where it has considered a person's capacity to manage his or her own affairs, and is satisfied that the person is not capable of managing those affairs, and there is a need for another person to manage those affairs on the person's behalf, and it is in the person's best interest that the order be made (Guardianship Act, s 25G). The Tribunal, after a hearing, may appoint a guardian where it is satisfied that the person is in need of a guardian (s 14).

80 It is not appropriate to attempt to bypass such procedures by an application under s 241 because of a fear that Raymond Lord is making improper dispositions of his estate in favour of one of his family members.

81 For these reasons, I order that the second defendant's interlocutory process be dismissed.

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