In the matter of Gerringong Storage Pty Ltd

[2025] NSWSC 302

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Gerringong Storage Pty Ltd [2025] NSWSC 302

Hearing dates:

28-31 January 2024, 20, 24 February 2025, 28 March 2025

Date of orders:

2 April 2025

Decision date:

02 April 2025

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Order for monetary relief and winding up order to be made; liquidator to be appointed as receiver of trust assets; direct parties to bring in short minutes of order to give effect to judgment.

Catchwords:

Oppression — Members’ rights and remedies — whether company should be wound up on just and equitable ground – whether binding agreement for sale of shares and units in trust established - quantification of loss – compensation for breach of trust – valuation of land.

Legislation Cited:

- Civil Procedure Act 2005 (NSW), ss 21, 56 – 58, 60

- Conveyancing Act 1919 (NSW), s 127

- Corporations Act 2001 (Cth), ss 53, 180-182, 232-233, 461, 1317H

- Evidence Act 1995 (NSW), ss 136, 140

- Real Property Act 1900 (NSW), s 42

- Supreme Court Act 1970 (NSW), s 67

Cases Cited:

- ADG United Pty Ltd v EG Enterprises Pty Ltd [2019] NSWSC 745

- Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43

- Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd (2018) 125 ACSR 227; [2018] QCA 048

- Ausko Cooperation Pty Ltd v Junapa Pty Ltd (2021) 20 BPR 41,523; [2021] NSWSC 615

- Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540

- Bahr v Nicolay [No 2] (1988) 164 CLR 604; [1988] HCA 16

- Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279

- Barnes v Addy (1874) LR 9 Ch App 244

- Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622

- Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356; (2010) 273 ALR 664; [2010] FCAFC 133

- Black v S Freedman & Co (1910) 12 CLR 105

- Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

- Bull v Lee (No 2) [2009] NSWCA 362

- Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; (2009) 257 ALR 610; [2009] HCA 25

- Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246; [1981] HCA 20

- Farah ConstructionsPty Ltd v Say-Dee Pty Ltd] (2007) 230 CLR 89; [2007] HCA 22

- Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97

- Gerard Cassegrain & Co Pty Ltd v Cassegrain [2011] NSWSC 1156

- Gillespie v Gillespie [2025] NSWCA 24

- G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631

- Haycraft v AF1 Services Pty Ltd [2023] FCA 774

- John Alexanders Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19

- Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd (1998) 3 VR 133

- Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72

- Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48

- Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692

- Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342

- Notaras v Waverley Council [2007] NSWCA 333 at [147]

- Nurisvan Investment Ltd v Anyoption Holdings Limited [2017] VSCA 141

- Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605; [2015] NSWCA 313

- Re Amazon Pest Control Pty Ltd [2012] NSWSC 1568

- Re Catombal Investments Pty Ltd [2012] NSWSC 775

- Re CNPR Limited [2018] NSWSC 989

- Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749

- Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399; [1966] 2 NSWR 211

- Re Double Bay Property Management Pty Ltd (in liq) [2020] NSWSC 203

- Re Gillespies Cranes Nominees Pty Ltd [2024] NSWSC 1136

- Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866

- Re Gunyahweh Pty Ltd [2023] NSWSC 1133

- Re Leslie Muir Holdings Pty Ltd [2019] NSWSC 1519

- Re Munja Bakehouse Pty Ltd [2024] NSWSC 6

- Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914

- Re Sirrah Pty Ltd (in prov liq) (2021) 152 ACSR 212; [2021] NSWSC 413

- Re Spitfire Q Pty Ltd [2021] NSWSC 866

- Read-Zorn v Origin Distillers Group Pty Ltd [2023] FCA 280

- Russell v Lee Holdings Pty Ltd (No 3) [2020] WASC 346

- Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149

- Simmons v NSW Trustee and Guardian [2014] NSWCA 405

- Snell v Glatis (No 2) [2020] NSWCA 166

- Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FCR 17; (2014) 103 ACSR 401; [2014] NSWSC 1484

- Stuart v Kingston (1923) 32 CLR 309 at 329; [1923] HCA 17

- Super 1000 Pty Ltdv Pacific General Securities Ltd (2008) 221 FLR 427; [2008] NSWSC 1222

- Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462

- Target Holdings Ltd v Redferns [1996] 1 AC 421

- The Owners – Strata Plan No 58087 v Matthews [2015] NSWSC 1906

- Thorp v Holdsworth (1876) 3 Ch D 637

- Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152

- Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; (2011) 84 ACSR 121; [2011] NSWCA 104

- Turner v O'Bryan­Turner (2022) 107 NSWLR 171; [2022] NSWCA 23

- Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68

- Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484

Category:

Principal judgment

Parties:

Carla Ruth Quine (Plaintiff/Cross-Defendant)
Gerringong Storage Pty Ltd (First Defendant)
Andrew James Scott (Second Defendant/Second Cross-Claimant)
Tara Leigh-Ann Sullivan (Third Defendant/First Cross-Claimant)
Eye on the Scotts Pty Ltd (Fourth Defendant/Third Cross-Claimant)
TKS Investments Pty Ltd (Fifth Defendant/Fourth Cross-Claimant)
Gerringong Commercial Hub Pty Ltd (Sixth Defendant)

Representation:

Counsel:
G Sirtes SC (25 February and 28 March 2025 only)/A Crossland/A Smyth (Plaintiffs/Cross-Defendant)
V Bedrossian SC/A Munro (Defendants/Cross-Claimants)

Solicitors:
Attwood Marshall Lawyers (Plaintiffs/Cross-Defendant)
Carter Ferguson Lawyers (Defendants/Cross-Claimants)

File Number(s):

2024/250669

Judgment

Nature of the application and background facts

1. The Plaintiff, Ms Quine, brings these proceedings seeking relief in respect of the affairs of Gerringong Storage Pty Ltd (“GSPL”) which is the trustee of the Gerringong Storage Unit Trust (“GSUT”). I first set out the background facts and a chronology, drawing on the pleadings, the affidavit evidence and Ms Quine’s chronology.

2. It is common ground (Second Further Amended Statement of Claim (“2FASC”) [1]-[3], Defence to Second Further Amended Statement of Claim (“Defence”) [1]-[3]) that GSPL was incorporated on 20 August 2015 and its directors were then Mr Stuart Quine (Ms Quine’s then husband); the Second Defendant, Mr Scott; and the Third Defendant, Ms Sullivan; and that Mr Quine then held 300 shares in GSPL; Ms Sullivan then held 300 shares in GSPL; and Mr Scott held 175 shares in GSPL.

3. It is also common ground (2FASC [4]-[4B], Defence [4]-[4B]) that, as I noted above, GSPL was the trustee of GSUT on the terms of a trust deed dated 20 August 2015 (“Trust Deed”). Initially, 775,000 units in the Unit Trust were issued; the Fourth Defendant (“EOS”) (which is trustee of a superannuation trust in which Mr Scott is a member or beneficiary) subscribed to and still holds 175,000 units in GSUT; the Fifth Defendant (“TKS”) (which is the trustee of a superannuation trust of which Ms Sullivan is a member or beneficiary) subscribed for and still holds 300,000 units in GSUT; and Mr Quine and Ms Quine each subscribed to 150,000 units in GSUT.

4. It is also common ground (2FASC [6], Defence [6]) that, until 27 September 2024, GSPL as trustee for GSUT owned land and premises in Gerringong, New South Wales (to which the parties refer as either the “land” or the “premises”) and carried on a storage business at the land by which parts of the relevant premises were leased or licensed to third parties; and that, on or about 27 September 2024 (while these proceedings were on foot) GSPL (under Ms Sullivan’s and Mr Scott’s control) transferred the land and premises and the business conducted on them to the Sixth Defendant, Gerringong Commercial Hub Pty Ltd (“GCH”). The Defendants plead (Defence [6(c)] that, at the time of that transaction:

“upon the transfer of the [p]remises and the business to [GCH], [GCH] (and the Defendants) caused an amount to be paid to, and retained by, [GSPL] which was more than sufficient to satisfy the obligations of the Defendants to pay to [Ms Quine]) the consideration agreed by [Ms Quine] as part of a binding arrangement (“June 2023 Agreement”) for the transfer of [Ms Quine’s] shares in [GSPL] and [Ms Quine’s] units in the [GSUT].”

I will address contested issues as to the status of the alleged agreement and the amount of that payment below.

5. It is also largely common ground (2FASC [8]-[11], Defence [8]-[11]) that the premises compromised uncovered storage spaces, covered spaces, shipping containers and industrial units; that CBK Constructions Pty Ltd (“CBK”), an entity related to Ms Sullivan and/or her husband Mr Sullivan, occupied part of the premises; that Eye on the Garden Pty Ltd (“EOG”), an entity related to Mr Scott, occupied part of the premises until November 2022; and, from about November 2018, Ms Quine began using a part of the premises for a business, although she subsequently declined or failed to pay rent and her right to occupy the premises was terminated by GSPL.

6. The Trust Deed (Ex J2, 272) set out (in cl 6) the requirements for a transfer of units in GSUT, a matter on which Ms Quine relied to contend that the parties had not reached a concluded agreement in respect of the transfer of units in GSUT, and Schedule 5 of the Trust Deed in turn set out an instrument of transfer of units. It has not been necessary to address that contention given the conclusions that I have reached on other grounds. Clause 8 of the Trust Deed set out the powers and discretions of the trustee and aspects of that clause plainly informed the scope of the parties’ obligations in respect of the conduct of GSPL’s affairs as trustee of GSUT, and the conduct of GSUT. The clause conferred several “absolute powers and discretions” on GSPL which included, in cl 8.10, the power:

“To exercise or concur in exercising or refrain from exercising all of the powers and discretions given by this Deed or by law notwithstanding that [GSPL] or any person who is a shareholder or director of [GSPL] has or may have a direct or indirect interest (whether as a unitholder or as a beneficiary [etc] …) the manner or result of exercising or refraining from exercising any such power or discretion or may benefit either directly or indirectly as a result of the exercise or refraining from exercising of any such power or discretion and notwithstanding that any “trustee for time being is a sole Trustee”.”

7. Clause 8.17 empowered GSPL to use or lease or licence the property or any part of it on such terms as it saw fit and specifically to permit any unitholder “to have the use of the property with or without payment of rent or outgoings and on such other terms as [GSPL] thinks fit”. That clause plainly excluded any contention it was not open to GSPL, or its directors, to allow occupancy of the land or the premises to unitholders in GSUT or their associates on a rent free basis or at less than market rent. Clause 8.27 of the Trust Deed permitted GSPL to employ or engage any person, and to pay that person’s expenses and other remuneration for services of that person, and contemplated the person engaged could be a unitholder and that that payment “shall be construed as a payment as a result of such employment and not on account of their position as a Unitholder”. Clause 8.23 allowed GSPL to deal with any related party of GSPL in such manner as it sought fit, including selling or disposing of property of the trust fund.

8. It is common ground (2FASC [12]-[14], Defence [12]-14]) that, on 5 November 2018, Ms Quine acquired from Mr Quine all of his 150,000 units in GSUT, she subsequently became a director of GSPL and acquired Mr Quine’s shares in GSPL; and, since that date, Ms Quine had held 300,000 units (38.7%) in GSUT; TKS has held 300,000 units (38.7%) in GSUT; and EOS has held 175,000 units (22.6%) in GSUT; and Ms Quine has held 300,000 shares (38.7%) in GSPL; TKS has held 300,000 shares (38.7%) in GSPL; and EOS had held 175,000 shares (22.6%) in GSPL.

9. It is broadly common ground (2FASC [15], Defence [15]; Ex J2, 844) that, on 3 December 2020, during a meeting of the then directors of GSPL, Ms Quine proposed that CBK, EOG and her entity trading from the premises enter into leases or licence agreements with GSPL and that they pay market rent and outgoings to GSPL for their respective use of the premises; and Ms Sullivan and Mr Scott expressed the view that the existing arrangements should continue. This exchange recognised that the business operated by GSPL had been conducted, prior to Ms Quine’s acquiring shares in GSPL and increasing her interest in GSUT, on a basis that (as the Trust Deed permitted, as I noted above) the shareholders and unitholders and associated entities (including Ms Quine and her associated entity) would occupy part of the premises on payment of less than market rates; Ms Quine sought to change that position from December 2020 and her view did not prevail.

10. On 17 December 2020, Ms Quine obtained a report from an accountant addressing “concerns pertaining to various financial transactions of [GSUT]”, which identified further information requested by the accountant (Ex J2, 996). Correspondence between the parties’ solicitors then followed (2FASC [16]-[17], Defence [16]-[17]). On about 1 April 2021, a resolution was carried at a meeting of members of GSPL to remove Ms Quine as a director of GSPL and Ms Quine does not contest the efficacy of that removal. I will refer to further correspondence between the parties in determining a dispute as to whether a binding settlement agreement was reached between them below.

11. On 17 October 2021, GSPL contended that Ms Quine owed $20,693.12 in arrears of rent for the land and, under s 127(1) of the Conveyancing Act 1919 (NSW), gave her one month’s notice to terminate her implied tenancy in writing (Ex J2, 1606, 1998-1999). Further correspondence followed which I address in dealing below with the dispute as to whether a settlement agreement was reached.

12. At least by 16 April 2022, Ms Quine made clear that she would be commencing these proceedings shortly. I will address the events surrounding the subsequent transfer of the Gerringong property by GSPL to GCH in dealing with Ms Quine’s claim to a constructive trust below.

Affidavit evidence

13. Ms Quine reads her affidavit dated 1 July 2024 which referred to the nature of GSPL’s business and its shareholders and to the unitholders in GSUT. She outlined, in evidence admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) (“Evidence Act”) as submission only, the matters which she considered had the result that she was being oppressed as a shareholder of GPSL and a unitholder in GSUT which included the matters relied on in these proceedings. She referred (Quine 1.7.24 [27]) to the payment by GSPL of fees for bookkeeping, yard maintenance, consulting fees and cleaning fees to entities associated with Ms Sullivan and Mr Scott and to the circumstances surrounding the acquisition of an interest in GSPL and the trust by her former husband and herself. She acknowledged that she “did not have much to do” with GSPL or GSUT at that time and that conversations concerning those matters largely took place between her former husband and Mr Scott. That matter does not support her claim that the business was established as a quasi-partnership, at least so far as she was concerned, although she says that she nominated herself to do bookkeeping and make inquiries regarding clients and states that she undertook those roles (Quine 1.7.24 [33]). Ms Quine also referred to having obtained additional interests in GSUT and a shareholding interest in GSPL following her divorce from her former husband, and says that she ceased as bookkeeper for the business, GSPL and GSUT after her divorce and that Ms Sullivan assumed that role.

14. Ms Quine also addressed the position in respect of the occupation of storage units at the premises by entities associated with her and her former husband and then by her after her divorce, and by Mr Sullivan and Mr Scott. She also referred, in evidence admitted with a limiting order under s 136 of the Evidence Act as to her belief, that Mr Scott and his associated business and Ms Sullivan and her associated business had not paid rent or outgoings at a “fair or commercial rate” in respect of their occupation of the premises (Quine 1.7.24 [44]). She addressed the circumstances in which she occupied several lots on the premises from about December 2020 until her lease was terminated. She referred to an agreement that rent should not be charged in respect of certain spaces reached at the time of the COVID-19 pandemic (Quine 1.7.24 [55]), although the parties gave no real attention to that agreement in submissions.

15. Ms Quine also addressed her concerns as to “unexplained” expenses (Quine 1.7.24 [60]ff). She did not press claims in respect of a significant number of these expenses at the hearing and I address the claims as to those categories of expenses that were pressed below. Ms Quine also addressed her difficulty in obtaining access to financial information concerning those matters and discussions as to those matters at a directors’ meeting on 3 December 2000. She referred to the report which she obtained from an accountant in December 2020 (Quine 1.7.24 [89]ff) which was admitted with a limiting order under s 136 of the Evidence Act as the statements made by the accountant and not as proof of the fact. She also referred to the circumstances in which she was removed as a director of GSPL in April 2021, and no challenge was brought to the efficacy of that removal; to the fact that she stopped paying rent and contributing to the accountants of the business (Quine 1.7.24 [106]); to the circumstances in which her lease over parts of the premises was then terminated, and to the further requests she and her solicitors made for access to documents and financial information concerning GSPL and GSUT. She addressed, at some length, her views as to financial information that was subsequently made available to her.

16. Ms Quine also read the affidavit dated 21 October 2024 of her solicitor, Mr Lethbridge, which addressed the circumstances in which Ms Quine and her legal representatives became aware of the sale of the property from GSPL to GCH, a transaction which I address below. By an affidavit dated 11 November 2024, Mr Wright, who is also a solicitor acting for her, addressed several aerial images of the land and the premises. By her affidavit dated 12 November 2024, Ms Quine in turn addressed matters which arose from her observation of those images and gave further evidence as to the occupation of the premises by interests associated with Mr Scott and Ms Sullivan, expenditures by GSPL, her claim to have been excluded from the management of GSPL after she had become a director of GSPL and the fact that she did not become aware of the sale of the premises by GSPL to GCH until 15 October 2024. I refer to the circumstances in which her solicitors had previously been provided information anticipating that sale below.

17. By an affidavit dated 16 December 2024 in reply, Ms Quine responded to, and took issue with, several aspects of Ms Sullivan’s evidence, although it is not necessary to address disputes as to those matters in order to resolve these proceedings. Ms Quine was cross-examined relatively briefly including as to the parts of the premises which were occupied by the several parties and her failure to pay rent for her occupancy of the premises.

18. Turning now to the evidence led by the Defendants, by his affidavit dated 6 December 2024, Mr Scott referred to the events at the time that GSPL was established; to his discussions with Ms Quine’s former husband as to the opportunity to purchase the premises and to an arrangement that had been in place since the inception of GSPL that each party would have one rent free spot and pay rent for other spots that they occupied; to the fact that he had occupied one rent free spot from the commencement of the business until he vacated the premises at the end of November 2022; and to the fact that his son was now using that rent free spot in the premises. He also addressed the rent free arrangement reached at the time of COVID-19, which he attributes to a suggestion made by Ms Quine, a matter which is denied by Ms Quine. It is not necessary to resolve the dispute as to that matter. Mr Scott also referred to difficulties that arose when he and Ms Quine occupied adjoining spaces in units 5 and 5A in the premises, to a subsequent dispute with Ms Quine’s father, and to his view that the expenditures that are challenged by Ms Quine are legitimate business expenses of GSPL with the exception of legal fees which he acknowledges ought to be adjusted. Mr Scott was cross-examined, relatively briefly, and indicated his lack of involvement with the challenged expenditures. I accept his evidence in that respect.

13. By her affidavit dated 6 December 2024, Ms Sullivan also addressed the circumstances in which GSPL was established in 2015 and purchased the land; referred to the circumstances in which CBK and EOG paid rent for spaces additional to rent-free units; and pointed to Ms Quine’s failure to pay rent to GSPL and to the subsequent entry by CBK and EOG into written leases with GSPL and to Ms Quine’s not having entered into such a lease. She also addressed the appointment of Ms Quine as a director of GSPL, although she identified an issue as to whether Ms Quine consented to that appointment, which it is not necessary to resolve; and she addressed the directors’ meeting held on 3 December 2020, Ms Quine’s removal as director on 9 March 2020, and the circumstances in which rent free occupancy of the premises was permitted during the COVID-19 pandemic. Ms Sullivan also dealt with Ms Quine’s access to financial information and set out the matters on which she and Mr Scott rely to contend that an agreement to purchase Ms Quine’s shares in GSPL and units in GSUT had been reached on 2 June 2023. I will address the claim in respect of that agreement below. Ms Sullivan addressed the circumstances of the transfer of the property from GSPL to GCH, which it is now accepted took place in breach of trust. She also responded, in some detail, to aspects of Ms Quine’s evidence and to the complaints made by Ms Quine in respect of expenditures, some of which are now not pressed.

14. By a further affidavit dated 22 January 2025, which was read only in part, Ms Sullivan again addressed the transfer of the land from GSPL to GCH, and contended that land was transferred on the basis of a value of $2.25 million and that Ms Quine’s approximate 39% interest in the premises (or more precisely GSPL and GSUT) had a value of approximately $877,500 which is the amount recorded on the transfer of the land. For completeness, she also gave evidence of her understanding that TKS and EOS were not required to pay stamp duty on their portion of the value of the land which was being transferred between related parties.

15. Ms Sullivan was cross-examined at some length, including as to aspects of GSPL’s administration and several of the expenditures which were in issue in the proceedings. She was not an impressive witness, and claimed to recall some matters of detail that might assist the Defendants but generally did not recall and claimed to be unable to comment on other matters without further inquiry. Ultimately, little turned on her cross-examination given the concessions made by the Defendants in respect of legal costs charged to GSPL and other less significant expenditures, and the difficulties with aspects of Ms Quine’s claims other than in respect of the sale of the land from GSPL to GCH in breach of trust, which I address below.

A preliminary issue - whether there is a binding agreement for Ms Quine to sell her shares in GSPL and units in GSUT

22. I first address a preliminary issue raised by a Cross-Claim dated 6 December 2024 (“CC”) brought by Ms Sullivan, Mr Scott, EOS and TKS. Broadly, the Cross-Claimants contend that, on 2 June 2023, they and Ms Quine reached a binding agreement to sell her shares in GSPL and her units in the trust at a specified price so that, they contend, she has no continuing interest in the conduct of GSPL and GSUT other than to receive the agreed purchase price under that agreement.

23. I first set out the correspondence between the parties that is relevant to this claim. After Ms Quine’s removal as a director of GSPL on 1 April 2021, by letter dated 28 April 2023 (Ex J2, 1746) the solicitors for Ms Sullivan, Mr Scott, EOS and TKS put an offer for Mr Scott and Ms Sullivan to purchase Ms Quine’s shares in GSBL and for EOS and TKS to purchase Ms Quine’s units in GSUT for a purchase price of $500,000 and otherwise on the terms of a written sale and purchase agreement, on the basis that Mr Scott and Ms Sutherland would pay the legal costs involved in having that agreement drawn up and any reasonable legal costs Ms Quine might incur in obtaining an independent review of the draft agreement. They requested Ms Quin’s indication as to whether she “agrees to this proposal” by 5:00pm on 26 May 2023.

24. On 15 May 2023, Ms Quine asked Mr Scott and Ms Sullivan to produce accounting records for GSPL and GSUT for her review (Ex J1, 1750-1751). By email dated 17 May 2023 (Ex J2, 1753) Ms Quine’s solicitor repeated that request and advised the solicitors for Mr Scott and Ms Sullivan that:

“… the longer this matter goes on it seems Court proceedings is the only way this matter will be resolved.

Please impress on your client that if [Ms Quine] commences proceedings the [GSUT] financials will be required to be produced in any event so there really is no point delaying. We have made numerous requests for access to the [GSUT] financials and no authority has been provided.

It is also odd that they expect [Ms Quine] to entertain a settlement offer without being able to assess the financials …”.

25. On 19 May 2023, Mr Scott and Ms Sullivan’s solicitors provided Ms Quine’s solicitors (Ex J2, 1754) with some documents relating to GSPL and GSUT, namely its tax return in respect of the trust, GSPL’s financial report for the period ended 30 June 2022 and a document relating to payments owing by Ms Quine.

26. On 26 May 2023 at about 3:00pm, Ms Quine sent a text message to Ms Sullivan stating that “I want $580k you can pay the legal cost of that or I’ll take it to court? Let me know” (Ex J2, 1810). The Cross-Claimants rely on this email and subsequent events for a claim that Ms Quine had agreed to sell her shares and units to them, which I address below.

27. By a letter dated 30 May 2023, the Cross-Claimants’ solicitor characterised Ms Quine’s text message as a “counteroffer” by Ms Quine to the Cross-Claimants proposal of 28 April 2023 and requested an estimate of Ms Quine’s associated legal costs, as this “will assist… in determining whether or not to accept [Ms Quine’s] [counter]offer” (Ex J2, 1811).

28. By email dated 2 June 2023 at about 10:09am, Ms Quine’s solicitor sent an email (Ex J2, 1813) stating that “[p]rior to being in a position to put forward and [sic] proper settlement offer my client requires some further information concerning the financials of the [GSUT]…” and requested further financial information relating to GSPL and GSUT and itemised accounts of several costs recorded in the financial statements. On 2 June 2023 at about 12:56pm, Ms Sullivan sent a text message to Ms Quine (Ex J2, 1810). stating that “[y]our offer is accepted. We will instruct solicitors to prepare the paperwork”.

29. By letter dated 5 June 2023 (Ex J2, 1817), Ms Quine’s solicitor “denie[d] that there is any binding agreement between the parties concerning settlement”. By email dated 6 June 2023 (Ex J2, 1819), Mr Scott and Ms Quine’s solicitors responded:

“Our position is that an offer was made by [Ms Quine] and it was accepted by my client.

My clients reserve their rights. Any conduct on behalf of my clients moving forward is not a waiver of their right to treat [Ms Quine’s] actions as a breach.

In the absence of an explanation, [Ms Quine’s] conduct appears disingenuous and her requests for further financial information appear to be a delay tactic.”

30. Ms Quine subsequently pursued access to the financial records of GSPL and GSUT, without success, for a considerable period (Ex J2, 1826-1827, 1908).

31. On 28 June 2023, the Cross-Claimants indicated their willingness to offer Ms Quine $580,000 for all her shares in GSPL and all her units in GSUT (Ex J2, 1909). On 14 July 2023, the Cross-Claimants again proposed (Ex J2, 1926-1927) that Ms Quine sell all her shares in GSPL to Mr Scott and Ms Sullivan, and all her units in GSUT to EOS and TKS, for a total purchase price of $580,000 and otherwise on the terms of a share purchase agreement.

32. On 20 September 2023, the Cross-Claimants again proposed that Ms Quine sell all her shares in GSPL to Mr Scott and Ms Sullivan, and all her units in GSUT to EOS and TKS, for an increased purchase price of $680,000, on the basis that GSPL would pay any dividends owing to her, less any rent owed by her, and that she must vacate the [l]and on or before settlement.” (Ex J2, 1990-1991). On 3 October 2023, Ms Quine offered to sell all her shares in GSPL to Mr Scott and Ms Sullivan, and all her units in GSUT to EOS and TKS, for a total purchase price of $780,000, on terms that she be paid any outstanding dividends and no adjustment should be made on account of rental arrears (Ex J2, 1995). I recognise that these subsequent negotiations were not necessarily inconsistent with the existence of an earlier agreement to acquire Ms Quine’s shares in GSPL and units in GSUT on less favourable terms, where they arguably sought a commercial resolution where Ms Quine did not accept that any earlier agreement had binding effect.

33. On 19 October 2023, after Ms Quine was (as I noted above) given one month’s notice to terminate her lease of the premises on 17 October 2023, she invited the Cross-Claimants, by no later than 26 October 2023, to draw up a Deed of Settlement and Release in line with their proposal of 20 September 2023 with specified modifications (Ex J2, 2002-2003).

34. Also on 19 October 2023 (Ex J2, 2003.1), Ms Sullivan advised the lender to GSPL, Westpac, that:

“We finally have reached an agreement for us to purchase [the] shares.

Price is $680K.

We will need to draw back the current funds available to us from the loan accounts (approximately $98K). So we will need to refinance the loan for $680K plus the $850K if possible please.

Our solicitors are drafting the deed now. Is there anything in particular you need in the deed to satisfy the bank?

Settlement date from execution of deed is 28 days. Is this do-able?

If you can let me know asap I’d appreciate it.”

35. By email dated 26 October 2023 (Ex J2, 2006) the solicitors for Mr Scott and Ms Sullivan advised the solicitors for Ms Quine that Mr Scott and Ms Sullivan considered Ms Quine’s offer acceptable but they were unable to accept that offer by that day and requested that the offer be kept open for another 21 days to allow Westpac to review the proposal. Ms Quine agreed to that suggestion by email from her solicitors dated 31 October 2023 (Ex J2, 2008), but requested as a sign of good faith that her dividends are now paid, noting that she was vacating the premises and required the dividends to pay for relocation and storage costs.

36. By email dated 6 November 2023 (Ex J2, 2010) to the solicitors for Mr Scott and Ms Sullivan, Ms Quine’s solicitors noted a lack of response to Ms Quine’s request and indicated that if Mr Scott and Ms Sullivan had not confirmed the proposed settlement agreement put forward by Ms Quine as acceptable and agreed to the immediate payment of dividends by 10 November 2023, then proceedings would be commenced seeking orders foreshadowed in earlier correspondence.

37. On 10 November 2023, Ms Quine’s solicitors then put a more qualified position and advised, by a “without prejudice” communication (Ex J2, 2015) that was tendered without objection, that:

“The other items set out in [Ms Quine’s] offer will remain open for a reasonable time period, could you please advise when your client[s] expects to be in a position to receive approval from the Bank and I will seek instructions from [Ms Quine] to extend the period of offer for that period?”

38. Mr Scott and Ms Sullivan’s solicitors responded by a without prejudice email dated 14 November 2023 (Ex J2, 2017-2018), also tenders without objection that the dividend for FY 2022 would be paid on that same day and the dividend for FY 2023 would be paid after the accountant had finalised GSPL’s tax return, within the coming weeks, and apologised for being unable to provide a timeframe to respond to the offer, where Westpac had requested an amended trust deed and the solicitors were working on that and would respond once Westpac had confirmed a timeframe.

39. A settlement on those terms was not finalised and, on 13 December 2023 (Ex J2, 2039-2045), Ms Quine’s newly appointed solicitors withdrew her previous proposal (Ex J2, 2029-2030) and pressed her request for production of financial records of GSPL and GSUT.

40. By letter dated 22 March 2024 (Ex J2, 2301-2302), the Cross-Claimants’ solicitor advised that, if Ms Quine commenced proceedings, they would file a Cross-Claim "based on the principles of promissory estoppel” for specific performance of an agreement between the parties dated 19 October 2023. That position was inconsistent with a binding agreement, in different terms, having arisen from the earlier exchange of emails.

41. By email dated 3 April 2024 (Ex J2, 1611), Ms Sullivan advised Westpac that:

“We are getting closer to a potential settlement date. Can you please tell me what’s required to discharge the current business bank loan?

And a timeframe required for settlement.

Aiming to have closed out before 18th April at this stage – providing [Ms Quine] doesn’t throw any curve balls.”

42. The surrounding correspondence at this time does not indicate the basis for such optimism, and it seems possible that this email contemplated, not agreement with Ms Quine, but a sale of the premises to a new entity without her involvement, which I address below.

43. By an email dated 8 April 2024 (Ex J2, 2307.2 – 2307.3) the solicitors acting for Mr Scott and Ms Sullivan referred to earlier emails concerning Ms Quine’s settlement offer made on 19 October 2023; they expressed the position that Ms Quine had “induced” their clients to pay dividends in accordance with the terms of that offer and attached a draft share sale agreement for review by Ms Quine and advised that Mr Scott and Ms Sullivan were ready to settle on 18 April 2024. By email dated 16 April 2024 (Ex J2, 2307.1 – 2307.2), they followed up as to any changes required by Ms Quine to the share sale agreement and the preparation of documents for a settlement. Ms Quine’s solicitor responded on the same day (Ex J2, 2307.1) advising that:

“We will not be accepting any invitations for any settlement.

As I’ve let you know multiple times previously, [Ms Quine] does not accept the matter has settled and therefore it is futile for you to prepare any further documents.

We are in the process of finalising proceedings on behalf of [Ms Quine] and we will serve those proceedings on your office shortly, noting that your office has previously confirmed that it has instructions to accept service.”

44. Returning now to the Cross-Claimants’ claim that a binding settlement was reached, they seek, inter alia, a declaration that they (or some of them) and Ms Quine had reached a binding and enforceable agreement on or about 2 June 2023 ("June 2023 Agreement") to the effect that the Ms Quine would transfer to the Cross­Claimants (or some of them) the entirety of her rights and interests in the issued share capital of GSPL and in the issued units in GSUT for consideration of $580,000 and an order that the June 2023 Agreement be specifically performed.

45. The Cross-Claimant’s plead (CC [2]) that, by the letter dated 28 April 2023 (to which I referred above), they made an offer to Ms Quine (“28 April Offer”) which was capable of immediate acceptance by her and which was expressed as remaining open for her acceptance until 5:00pm on 26 May 2023 with terms to the effect that Ms Sullivan and Mr Scott would purchase Ms Quine's shares in GSPL; EOS and TKS would purchase Ms Quine’s units in GSUT; the purchase price payable to Ms Quine for the shares in GSPL and the units in GSUT would be $500,000; the Cross-Claimants would pay the legal costs of drafting a written agreement to record the said purchase; they would pay Ms Quine’s reasonable legal costs regarding an independent review of that written agreement; and they would pay her reasonable legal costs associated with completion of the sale of the shares and units. The Cross-Claimants also rely on Ms Quine’s text message to Ms Sullivan at 3:00pm on 26 May 2023 (to which I referred above) stating "I want $580k you can pay the legal cost of that or I'll take it to court? Let me know" and on Ms Sullivan’s text message to Ms Quine at 12:56pm on 2 June 2023 (to which I also referred above) stating "Hi. Your offer is accepted. We will instruct solicitors to prepare the paperwork".

46. The Cross-Claimants then plead (CC [3]-[4]) that Ms Quine’s text message on 26 May 2023 was a counteroffer with terms that:

“(a)   An express term to the effect that the Cross-Claimants would pay to the [Ms Quine] an amount of $580,000 as consideration for the transfer by [Ms Quine] to the Cross-Claimants of all of her shares in [GSPL] and all of her units in [GSUT];

(b)   An express term to the effect that the Cross-Claimants would pay the legal cost associated with the transaction referred to in sub-paragraph (a) above, including [Ms Quine’s] own costs associated with documenting and giving effect to that transaction; and

(c)   To the extent relevant or necessary, an implied term (or terms that arose by implication) that the 26 May Counter-Offer was otherwise made in accordance with, or upon the same terms, as the 28 April Offer, to the extent that it was not inconsistent with the 26 May Counter-Offer.”

47. The Cross-Claimants rely on Ms Sullivan’s text message in response to contend that, on 2 June 2023, they communicated to Ms Quine their acceptance of that counteroffer and (CC [5]) that:

“Upon the Cross-Claimants' communication to [Ms Quine] of their acceptance of the terms of the 26 May Counter-Offer on 2 June 2023, there immediately arose a binding and enforceable agreement between those parties (“Binding Agreement”), the terms of which were:

(a)   In the same terms as the 28 April Offer, but at a purchase price of $580,000; or alternatively;

(b)   In the same terms as the 26 May Counter-Offer and supplemented by the additional non-inconsistent terms of the 28 April Offer; or alternatively;

(c)   In the terms of the 26 May Counter-Offer, together with such further terms as would be implied in fact (so as to give business efficacy to the contract) or implied in law (by reason of the nature or class of contract), including those terms set out at paragraph 2 above of this Cross-Claim (save insofar as the price is as identified at sub-paragraph (a) above).”

48. The Cross-Claimants claim (CC [6]-[7]) that they are entitled to specific performance of the Binding Agreement and say that they are ready, willing and able to perform the entirety of their obligations under the Binding Agreement and that.

“In the event that the Court is minded to grant the relief sought by the Cross-Claimants with respect to the Binding Agreement, it will follow that the factual and legal basis for the grant of leave to the Cross-Defendant (as Plaintiff) to pursue a derivative claim on behalf of Gerringong Storage will no longer exist, such that the Cross-Claimants seek an order revoking the grant of that leave.”

49. Turning now to the parties’ submissions, Mr Bedrossian and Mr Munro who appear for the Defendants submit, in their written outline of opening submissions, that:

“The parties objectively reached an immediately binding agreement for the sale by [Ms Quine] of her shares [in GSPL] and units [in GSUT] upon terms that required the Defendants to pay $580,000 plus various legal costs. There may be debate as to whether the agreement falls within the first or second of the classes in Masters v Cameron (1954) 91 CLR 353, but that does not alter the binding effect of the agreement.”

50. In their closing written outline of submissions, Mr Crossland and Mr Smyth, who appear for Ms Quine, respond that:

“Ms Quine denies there was a binding agreement as alleged. In the alternative, in the event there was such an agreement it has been abandoned by each of the parties. Still further … the court should exercise its discretion not to make an order for specific performance of the Alleged Agreement if indeed it came into existence.”

51. Mr Crossland and Mr Smyth contend that the two text messages on which the Cross-Claimants rely did not give rise to a binding agreement because, inter alia, their contents were too uncertain where the alleged offer did not address to whom units were being sold, or in which numbers to which unit holders; the alleged offer did not address what price was referable to which transfer of shares or units; and the two text messages did not identify any time for the payment of the funds or the purchase of the shares. They also contend that:

“… the matters which make the terms of the parties’ communications too uncertain in contractual terms to have given rise to a binding agreement, give rise also to the following position: so much was left to be determined between the parties in their communications set out above, that the Court should not find that they intended to make a concluded bargain. This is especially so when, on the case the [D]efendants propound (that the text message from Ms Quine on 26 May 2023 incorporated the terms of the earlier solicitors letter), the parties acknowledged there would be written agreement, presumably detailed and formal in nature, transferring the shares and the units in [GSPL] and GSUT.”

52. The applicable principles are well-established and I have here drawn on my summaries of them in The Owners – Strata Plan No 58087 v Matthews [2015] NSWSC 1906, ADG United Pty Ltd v EG Enterprises Pty Ltd [2019] NSWSC 745 and Re Leslie Muir Holdings Pty Ltd [2019] NSWSC 1519 at [27]ff. In Masters v Cameron (1954) 91 CLR 353 at 360–362, [1954] HCA 72, the High Court identified three categories of case which may exist where parties which have been in negotiation reach agreement upon terms of a contractual nature. The first category of case is one where the parties have reached finality and intend to be immediately bound to the performance of the relevant terms, but propose to have the terms restated in a form which will be fuller or more precise, but not different in effect. A second case is where the parties have reached complete agreement, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. A third case is one in which the intention of the parties is not to make a concluded bargain unless and until they execute a formal contract. At first instance in Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628, McLelland J identified a fourth case, where the parties were content to be bound completely and exclusively by the terms they had agreed, while expecting to make a formal contract in substitution for the first contract, containing, by consent, additional terms.

53. Whether a contract has been formed in this situation depends on the objective intention of the parties ascertained from the terms of the relevant document, read in light of the surrounding circumstances, and, if the terms of that document indicate that the parties intended to be bound immediately, then effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction: G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634, 636; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 (“XIVth Commonwealth Games”) at 548-9; Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149 (“Sagacious Procurement”) at [66].

54. In XIVth Commonwealth Games at 540, Gleeson CJ observed that:

“In a case where a court is required to make a judgment concerning the intention of the parties in relation to what might broadly be described as a Masters v Cameron ((1954) 91 CLR 353) dispute, it will normally be of importance that the court have an understating of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence…

It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see, eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.”

55. In Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605; [2015] NSWCA 313, Beazley P (with whom Bathurst CJ generally agreed and Meagher JA agreed) observed (at [64]-[65]) that whether parties intend to be immediately bound, where they have reached agreement as to the terms of a contract but have also agreed that a further, formal agreement is to be executed, is to be determined objectively, having regard to the “outward manifestations” of their intentions. Her Honour also observed (at [65]) that the question was “what each party by words and conduct would have led a reasonable person in the position of the other party to believe”. Beazley P also observed (at [69]) that the three classes of case in Masters v Cameron above no longer applied, if they ever were, as strict categories into which cases must fall. Her Honour noted (at [72]) that it was relevant to consider the commercial context and surrounding circumstances of the parties’ dealings in determining whether a binding agreement had come into existence. The Court of Appeal also there noted (per Bathurst CJ at [15] and per Beazley P at [118], with whom Meagher JA agreed), consistently with the case law to which I referred above, that the Court may have regard to subsequent conduct of the parties in determining whether, at an earlier juncture, the parties intended to enter into a binding agreement.

56. In Nurisvan Investment Ltd v Anyoption Holdings Limited [2017] VSCA 141 at [106] (“Nurisvan”), the Court of Appeal of the Supreme Court of Victoria similarly observed, in determining whether the heads of agreement in that case constituted a binding contract to enter into a share sale, that:

“the critical issue concerns the intention of the parties which must be ascertained objectively from the terms of the document, construed in the context of the surrounding circumstances. In that respect, it is relevant to take into account the commercial context and surrounding circumstances of the parties’ dealings.” [citations omitted]

57. The fact that the parties might negotiate further, additional terms, that were not included in a first agreement, is not necessarily inconsistent with a conclusion that the first agreement constituted a binding contract between them: Nurisvan at [107]. The Court may have regard to the conduct of the parties after the date of entry into the alleged contract to determine whether they entered a binding contract: Sagacious Procurement at [105]; Nurisvan at [77]ff, [82]-[83].

58. Mr Crossland, with whom Mr Smyth appears for Ms Quine, also draws attention to the decision of Darke J in Ausko Cooperation Pty Ltd v Junapa Pty Ltd (2021) 20 BPR 41,523; [2021] NSWSC 615 at [45]-[46], where his Honour considered whether the parties had there reached a binding agreement for a new lease, and observed that:

“Questions of this nature are ordinarily determined by reference to the classification of cases as expressed in Masters v Cameron (supra) at 360, and the principle stated in that case at 362 that the question depends upon the intention disclosed by the language the parties have employed. The relevant principles have been stated and applied in countless cases since.”

His Honour then referred Gleeson CJ’s observations in XIVth Commonwealth Games and went on to note that:

“The determination as to intention rests upon an objective analysis of the conduct of the parties (see, for example, GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634 E-F per McHugh JA; Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR 605; [2015] NSWCA 313 at [64] –[65] and [69] per Beazley P; Darzi Group Pty Ltd v Nolde Pty Ltd (supra — Court of Appeal) at [4]). It is legitimate for this purpose to have regard to the subsequent conduct of the parties to determine whether, at an earlier juncture, the parties intended to enter into a binding agreement (see Pavlovic v Universal Music Australia Pty Ltd (supra) at [118]).”

59. I am satisfied that the exchange of emails between Ms Quine and Ms Sullivan did not give rise to a binding and enforceable agreement, having regard to the objective intention of the parties ascertained from the terms of the emails, read in light of the surrounding circumstances. I recognise that it is possible that, given a sufficiently attractive offer to acquire her shares and units, Ms Quine might have been prepared to accept that offer without pursuing her longstanding request for access to financial information concerning GSPL and GSUT. However, it seems to me unlikely here that the parties objectively intended to be immediately bound by the exchange of emails rather than a share sale agreement, where their earlier correspondence had addressed not only the intended preparation of that agreement but also the costs of preparation and Ms Sullivan’s review of it, recognising its significance for both parties. While the sale of the shares and units was not a particularly complex transaction, it would take place in circumstances that the parties’ relationship was poor and they had had been in dispute for some time, and it seems to me unlikely that either would have objectively intended that no more than an agreement as to price was necessary to resolve that dispute or that all other aspects of a resolution were so obvious that they did not require agreement between the parties.

60. It also seems to me that neither party had here by words or conduct led the other party to believe there was a concluded agreement, where critical issues were not resolved. Importantly, no agreement had been reached as to a time for completion for the sale or whether that completion was conditional on the Cross-Claimants obtaining finance to complete the transaction. It seems to me unlikely that either party, where their relationship was poor and they were already in dispute, would have been content to rely on an implied terms that completion would occur in a “reasonable” time, where a further dispute could readily arise as to that issue. I note, in passing, that no agreement had also been reached as to whether Ms Quine would warrant that her shares and units were unencumbered, and it seems to me unlikely that the Cross-Claimants would objectively have wished to acquire those shares and units at the nominated price while taking the risk that a lender had an equitable charge over them and Ms Quine had no economic interest in them. The subsequent conduct of the parties, including the Cross-Claimants’ later threat to enforce a later agreement in different terms, is largely inconsistent with their entry into a binding agreement by those emails. No question of waiver, or the exclusion of any waiver, arises where a binding and enforceable contract is not established. It is also not necessary to address Ms Quine’s claim that any binding and enforceable contract was abandoned by the parties where I have held that no such contract was established.

61. The Defendants’ Cross-Claim will therefore be dismissed and I address the balance of the issues in the proceedings on the basis that Ms Quine was at all relevant times a shareholder in GSPL and a unitholder in GSUT.

The transfer of the premises from GSPL to GCH and Ms Quine’s pleaded constructive trust claim

62. Ms Quine seeks, by way of a derivative claim brought on GSPL’s behalf, a declaration that GCH holds the Gerringong property and any funds it retains from the loan funds paid by La Trobe on or about 27 September 2024 on constructive trust for GSPL (Further Amended Originating Process (“OP”) [1A(a)]) and a declaration that Mr Scott and Ms Sutherland hold on constructive trust for GSPL any funds received by them from the loan funds paid by La Trobe on or about that date.

63. Turning first to Ms Quine’s pleaded case, it is common ground (2FASC [29A], Defence [29A]) that, as I noted above, by a deed of transfer dated 18 June 2024 and registered on 27 September 2024, Ms Sullivan, Mr Scott, EOS and TKS caused GSPL to transfer the premises to GCH.

64. Ms Quine pleads and the Defendants admit (2FASC [29B], Defence [29B]) that the transfer was a breach of trust by GSPL. Ms Quine also pleads and the Defendants deny that the transfer:

“a   not made for the benefit of all the holders of the units in [GSUT];

c   was for the reasons below made in bad faith and was fraudulent and dishonest; and

d   was not for a proper purpose and was ultra vires.”

65. Ms Quine relies on several particularised matters in support of that allegation, which I address below.

66. The Defendants respond (Defence [29B]) that the transfer of the premises occurred for a consideration of $2.25 million, which was plainly a reference to the stated consideration rather than the amount then paid, and that:

“cash in an amount of approximately $690,000 was paid into an account under the control of [GSPL] for the purpose of securing and satisfying the interests of [Ms Quine] pursuant to the June 2023 Agreement…”.

67. Ms Quine in turn pleads (2FASC [29C], denied Defence [29C]) that:

“In the circumstances pleaded and particularised in [2FASC [29B], [GCH] holds the [p]remises on constructive trust for GSPL and the 2nd-6th [D]efendants hold on constructive trust for [GSPL] any funds received by them from the loan funds paid by La Trobe on or about 27 September 2024 secured over the [l]and after the transfer.”

This pleading does not identify the basis on which a constructive trust should be imposed as against GCH, as a result of the breach of trust pleaded as against GSPL. Ms Quine then pleads (2FASC [29CA]) that several Defendants, not including GCH, knowingly assisted in the alleged breach of trust. She then advances a further allegation (2FASC [29B]) against Defendants including GCH as to the circumstances in which the Gerringong property was subsequently mortgaged to secure an increased borrowing and relies (2FASC [29C]) on that matter for a claim for compensation which I address below.

68. I now turn to the events surrounding the transfer of the Gerringong property by GSPL to GCH. As I noted above, at least by 16 April 2022, Ms Quine had made clear that she would be commencing proceedings shortly. At least by 17 April 2024, discussions had occurred between Ms Sullivan and GSPL’s accountant concerning the establishment of a new entity, presumably to acquire the Gerringong property, and the Defendants’ solicitors had rightly then drawn attention to the “risk of not having moral high ground” arising from that course (Ex J2, 1837). Importantly, so far as Ms Quine seeks to establish fraud on the part of GCH, I do not understand that advice to have extended to a suggestion that the proposed transaction would be legally wrongful or fraudulent in its nature, and conduct that falls short of the “moral high ground” is not necessarily fraudulent in any relevant sense. Ms Sullivan claimed that she did not recall the relevant conversation in cross-examination (T103-104) although she acknowledged that the notion of setting up a new entity had been discussed with GSPL’s accountant and that she subsequently resolved to set up a new entity and transfer the property to that new entity (T105). GCH was incorporated on 12 June 2024 (J1, 2701).

69. By circular resolution signed by Ms Sullivan and Mr Scott and dated 17 June 2024 (Ex J2, 2606-2607), the directors of GSPL resolved that:

“1   It is agreed that [GSPL] will transfer the [p]roperty and the [b]usiness to [GCH] for $2,250,000.00.

2   It is agreed that after the transfer is completed, [GSUT] will be wound up.”

70. On 18 June 2024, GSPL and GCH entered into a deed (Ex J2, 2320) to transfer the land to GCH for $2.25 million (exclusive of GST) which recorded that GSPL had agreed to sell the property to GCH for $2.25 million and provided, in cl 1, that GSPL assigned and conveyed to GCH all right, title and interest in the property in fee simple. Clauses 3 and 4 dealt with tax implications of the sale. Clause 7 provided that:

“The balance of the purchase price adjusted in accordance with the value of the units owned by [TKS] and [EOS] be paid on the Completion Date.”

That clause had the result that the stated purchase price was not to be paid to GSPL at completion. Clause 8 provided that “[o]nce the [t]ransfer has been affected [sic], [GSPL] and [GSUT] will be wound up and net amount remaining in [GSUT] will be vested in the unitholders in accordance with their unit entitlements”.

71. By a valuation directed to the value of the property as at 21 April 2022 (Ex J2, 1666) Mr Kelkert (who now gives evidence as an expert witness for the Defendants, which I address below) valued the land and premises at $2,200,000 exclusive of GST. Mr Kelkert there noted that the market was then impacted by uncertainty caused by the COVID-19 pandemic and that there was significant valuation uncertainty in respect of that valuation. That valuation adopted a direct comparison approach and capitalisation approach after taking into account comparable sales evidence and Mr Kelkert noted that the property was operating as a storage site but that “any value of the business is considered to be tied up within the value of the rea[l] estate component”. In cross-examination, Mr Kelkert observed that the higher valuation which he now gives to the property, in his expert report led in these proceedings, reflects the likelihood that the property would be purchased for redevelopment purposes.

72. It appears that, on 7 August 2024, the Defendants’ solicitors provided Ms Quine’s solicitors with a link to a drop box which contained, inter alia, a copy of the directors resolution passed on 17 June 2024. They did not draw Ms Quine’s attention to that resolution and Ms Quine’s solicitors do not appear to have read it, since its effect would have been plain to any solicitor who had read it. I return to that matter below.

73. On 2 September 2024, La Trobe Financial Services Pty Ltd (“La Trobe”) approved an application by GCH for a $1.83 million loan facility, to be used “for Refinance [purposes] with equity/cash out” against a first-registered mortgage over the land and personal guarantees from Mr Scott, Ms Sullivan and others (Ex J1, 2675-2688). On 27 September 2024, Westpac discharged its existing mortgage given by GSPL over the land; GSPL transferred the land to GCH and La Trobe took a mortgage over the land from GCH (Ex J2, 2694, 2695-2696, 3045). A transfer of the land was stamped with the payment of duty on the basis that GCH had paid consideration of $877,500 (Ex J1, 2695-2696, 3046). The settlement completion record in respect of the property (Ex J2, 2712 -2713) also recorded payment of consideration of $877,500 and, for completeness, loan proceeds of $1,792,990 of which $1,030,414 described as vendor’s funds (and presumably included the amount paid to GSPL) and $756,915.44 was paid to Westpac described as “loan payout”.

71. By letter dated 15 October 2024 (Ex J1, 2706), GSPL’s solicitors advised Ms Quine’s solicitors that:

“We confirm that in accordance with the Directors’ Circular Resolution dated 17 June 2024, provided to your client on 7 August 2024, the [Gerringong property] was sold to [GCH] on 27 September 2024.”

The letter went on to advise that the sale price of the property was $2.25m; refer to the valuation report prepared by Mr Kelkert and the methodology adopted on that report, which valued the property at $2.25 million by reference to comparable sales; and contended that:

“The property was therefore sold by [GSPL] for market value.”

75. That letter went on to advise that:

“We confirm that [GSPL] is now in the process of being wound up and the accountant is finalising the transfer for distribution. Our clients’ intention was to provide final distribution amounts to your client prior to mediation however, our client is not yet in receipt of those final calculations from the accountant. As such, and for the purposes of progressing mediation on 17 October 2024, our client had prepared the enclosed estimate of calculations for your client, inclusive of the distributions she will receive once finalised. …

Our clients wish to reassure your client that the sale was in no way intended to prejudice her. The sale, which was commenced prior to these proceedings, was to assist parties at resolving the significant impasse to date. We note that the longstanding impasse between our respective clients, has troubled business operations for some time and has caused a stalemate in the resolution of these disputes.

Our clients look forward to resolving all matters between our respective clients.”

76. An attached schedule referred to the property value; the repayment of funds to Westpac in respect of its loan, adjustments for trade debtors and creditors of GSPL and anticipated costs of a winding up and other costs; and identified an anticipated payment to Ms Quine, which was plainly to be funded by the cash amount that was paid in respect of GCH’s purchase of the property from GSPL.

77. Ms Quine’s solicitor responded by an email dated 15 October 2024 (Ex J1, 2710) contending (it appears, wrongly) that Ms Quine had not previously received a copy of the directors’ circular resolution authorising the sale of the premises and that:

“… Ms Quine has procured valuation evidence which puts the value of the property at $4.5 million. There is a significant disparity between our respective clients’ valuations of the property from which it may be inferred, there are irregularities with one of the valuations, to say the least [sic]”

I do not accept the valuation evidence led by Ms Quine in respect of the property, for the reasons that I set out below.

78. By a further email dated 16 October 2024 to Ms Quine’s solicitors (Ex J1, 2715), the Defendants’ solicitors confirmed that the directors’ circular resolution authorising the sale of the premises to GCH had been provided to Ms Quine’s solicitors on 7 August 2024, by a drop box link which contained documents produced in response to a notice to produce dated 24 July 2024. They also attached a copy of the deed of transfer dated 18 June 2024 and other documents relating to the sale of the property. The solicitors also advised that:

“The accountant for [GSPL] has been engaged to wind the company up and we are instructed by him that in the order of events, the proceeds of the sale (funds in trust) must be distributed before he can take steps to wind up the company. We have urgently requested the balance sheet from him. … We will provide a copy of the same as soon as it becomes available. …

We reiterate that our clients, in their position as directors and prior to these proceedings, have taken steps to affect the sale of [GSPL] to allow parties to move forward from the impasse that has occurred for some [2] years now. [GSPL’s] business operations have been significantly impacted by the impasse between our respective clients. We note that your client’s pleadings sought to wind-up [GSPL] a matter which has been resolved by this sale. It appears to us that the only matter to be resolved between parties, is in relation to the value of the property and the amount to be distributed to your client as part of the winding up of [GSPL] and [GSUT].”

79. I recognise that that contention has a somewhat self-serving character, but there is force in the proposition that a sale of the land and premises at fair value was likely an essential step in separating the parties and paying out the value of Ms Quine’s (or indeed Ms Sullivan’s and Mr Scott’s) interest in GSPL and GSUT, and the position there taken by Ms Sullivan and Mr Scott highlights the fact that the sale of the property to GCH (as long as it took place at its then fair value) would allow Ms Quine to be paid the value of her interest in GSPL and GSUT, rather than deprive her of the value of that interest. I also recognise that Ms Sullivan and Mr Scott did not act promptly or in a particularly transparent manner in disclosing the resolution approving the sale of the land and premises, although I accept that was in fact disclosed on 7 August 2024 in a manner that did not highlight that resolution. There was a shorter delay in disclosing the completion of the sale of land and premises, which had occurred on 27 September 2024, by the solicitors’ letter dated 15 October 2024.

Whether Perpetual should have been, and should now be, joined as party to the proceedings

80. I accept that, in a proper case, a constructive trust may be a proper remedy for a transfer of land made to a third party in breach of trust. However, an issue initially arose in these proceedings as to whether I could grant that relief where the interest of Perpetual Corporate Trust Ltd (“Perpetual”) as registered mortgagee of the land (presumably as custodian or nominee for La Trobe) would arguably be adversely affected by that relief and Perpetual had not been joined as party to the proceedings in respect of the claim for this relief, or given notice of the application and an opportunity to be heard as to the form of any relief to be granted; compare John Alexanders Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 especially at [133], [161], although I recognise that that case concerned an unregistered rather than a registered mortgage. I raised that question for Ms Quine’s consideration in the course of her opening submissions, but she then took no step to address it.

81. In their written outline of closing submissions, Mr Crossland and Mr Smyth acknowledged that:

“given John Alexanders Clubs Pty Limited v White City Tennis Club (2010) 241 CLR 1, [Ms Quine] accepts the difficulty, despite the admitted breach of trust, of declaring a constructive trust over the Land.”

Mr Crossland also accepted in oral closing submissions that this relief could not be granted where it would or may adversely affect Perpetual’s interest in the land, although he was not instructed to abandon this claim and subsequently sought to press it.

82. Subsequently, Ms Quine sought, in closing submissions and then by interlocutory process, to amend the relief sought to claim a constructive trust “subject to” Perpetual’s mortgage over the land and limited to GCPL’s “interest” in the land. I declined to permit that amendment, where Perpetual was also not given any opportunity to be heard in respect of it, for reasons set out in my earlier judgment dealing with that application. After the evidence had closed and the hearing was complete other than for her reply submissions, Ms Quine then brought a further application seeking to join Perpetual as party to the proceedings.

83. Ms Quine’s application to join Perpetual was heard on 28 March 2025, after all submissions in the proceedings were complete, and Mr Sirtes appeared for her on that application. Ms Quine read an affidavit dated 24 February 2025 of her solicitor, Mr Lethbridge, in support of that application. He set out an explanation for her not having joined Perpetual as party to the proceeding at an earlier point, by reference to decisions made by Ms Quine’s legal representatives as to the conduct of the proceedings. Ms Quine also read a second affidavit dated 19 March 2025 of Mr Lethbridge in support of that application. He there referred to an exchange of correspondence with a solicitor acting for Perpetual on La Trobe’s instructions and to an email dated 17 March 2025, by which Perpetual advised that it consented to be joined in the proceedings; would then file a submitting appearance in the proceedings; and neither consented to nor opposed the declaration of a constructive trust over the Gerringong property.

84. By written submissions dated 12 March 2025, Mr Sirtes outlined the circumstances in which Perpetual had not been joined as party to the proceedings. Mr Sirtes submitted that Ms Quine was “personally innocent” of the decisions made by her legal representatives in the conduct of the proceedings. Mr Sirtes rightly accepted that the late joinder of Perpetual would cause prejudice to the public administration of justice, but attributed that consequence to decisions of Ms Quine’s legal representatives rather than any decision on her part. I put aside the fact that Ms Quine would ordinarily be expected to have given instructions to her legal representatives as to the conduct of the proceedings and any application of the principle that she is ordinarily bound by her legal representatives conduct of the proceedings, where I will decide the question of Perpetual’s joinder on other grounds. Mr Sirtes also submitted that Ms Quine had not abandoned her claim for a constructive trust, although Mr Crossland had accepted the “difficulty” of establishing that claim where Perpetual had then not been joined as party, and I proceed on that basis. Mr Sirtes in turn addressed several matters which Ms Quine contends support the exercise of the Court’s discretion to permit an amendment to the proceedings to join Perpetual as party, having regard to ss 56 – 58 of the Civil Procedure Act 2005 (NSW) (“CPA”). Plainly, the facts that Perpetual does not oppose its joinder to the proceedings would file a submitting appearance rather than take an active role in the proceedings, and neither consents to nor opposes the relief sought by way of constructive trust, are matters which support its joinder to the proceedings, if that joinder would have any utility.

85. By their submissions made on 21 March 2025, the Defendants opposed the joinder of Perpetual to the proceedings, although Mr Bedrossian recognised that Perpetual did not itself object to its joinder. First, Mr Bedrossian submitted that Perpetual’s joinder to the proceedings had no utility, because Ms Quine had not properly pleaded a basis for relief by way of a constructive trust over the land. I address the question of the utility of Perpetual’s joinder below. Mr Bedrossian recognised that Ms Quine pleaded (2FASC [29C]) that GCH held the land on constructive trust for GSPL but submitted that she did not plead a basis for the imposition of that trust. I will assume below, without deciding, that this pleading was sufficient to raise an allegation of knowing receipt of trust property, to the extent that the factual basis for that allegation is elsewhere pleaded by Ms Quine. Importantly, Mr Bedrossian also pointed out that, although Ms Quine brought a claim for knowing assistance against several defendants (2FASC [29CA]), she did not bring such a claim against GCH, and he also submitted that Ms Quine did not plead the requisite knowledge or requisite assistance on the part of GCH to establish a claim for knowing assistance. I also return to these matters below.

86. Mr Bedrossian also submitted the application to join Perpetual was brought too late and involved too great a change in the conduct of the proceedings to be permitted. Mr Bedrossian took issue with Ms Quine’s claim that she had not abandoned a claim for a constructive trust in Mr Crossland’s closing submissions, and he emphasised the delay in her bringing the application to join Perpetual to the proceedings. Mr Bedrossian also submitted that, if Perpetual were joined as party to the proceedings, the Defendants would need to lead additional evidence, including addressing financial adjustments consequential upon the imposition of a constructive trust. I do not accept that submission where Ms Quine has always sought relief by way of a constructive trust, whether or not she had properly pleaded that claim or joined the necessary parties, and the Defendants had the opportunity to address those matters in their evidence in chief. There is no suggestion that they did not do so by reason of any assumption that a constructive trust would not be ordered because Perpetual had not then been joined as party to the proceedings.

87. In further written submissions made on 26 March 2025, Mr Sirtes and Mr Crossland submitted that, where Perpetual did not oppose its joinder to the proceedings, there was no barrier to its joinder and that there was no prejudice to the Defendants from that joinder where they could previously have led evidence responding to Ms Quine’s claim for relief by way of a constructive trust.

88. I advised the parties that I would address the question whether Perpetual should be joined as party to the proceedings in this substantive judgment. It is not necessary to reach a final view as to several of the issues addressed by the parties in submissions, including the lateness of the application and any prejudice to the Defendants in allowing it after the evidence and submissions had closed, in order to determine this application. I have concluded that the application should be dismissed where the joinder of Perpetual as party would have no utility, since an order for a constructive trust could not be made against GCH, irrespective of whether Perpetual was now joined as party to the proceedings, for the reasons that I address below.

Whether Ms Quine had pleaded a claim in knowing receipt against GCH and whether she can establish a constructive trust on that basis

89. As I noted above, Ms Quine pleads (2FASC [29C], denied Defence [29C]) that:

“In the circumstances pleaded and particularised in [2FASC [29B], [GCH] holds the [p]remises on constructive trust for GSPL and the 2nd-6th [D]efendants hold on constructive trust for [GSPL] any funds received by them from the loan funds paid by La Trobe on or about 27 September 2024 secured over the [l]and after the transfer.”

90. I noted above that this pleading does not identify the basis on which a constructive trust should be imposed as against GCH, as a result of the breach of trust pleaded as against GSPL. On the basis that Ms Quine likely sought to advance a claim in knowing receipt, my Associate (at my request) advised the parties on 13 March 2025, after the conclusion of substantive submissions, that I would allow them a further opportunity for them to make:

“Any further brief submissions as to whether, putting aside any question of joinder of Perpetual, relief by way of constructive trust could be ordered against GCH as registered proprietor of the land, having regard to the caselaw reviewed in, inter alia, Turner v O’Brien-Turner (2022) 107 NSWLR 171; [2022] NSWCA 23 [“Turner”).”

91. In supplementary submissions, Mr Bedrossian submitted that Ms Quine makes no claim against GCH based upon knowing receipt. I will assume, without deciding, favourably to Ms Quine, that Ms Quine’s pleaded claim for a constructive trust (2FASC [29C]) sufficiently raises that claim, where she elsewhere pleads other facts relating to the transfer of the land by QSPL to QCH. Mr Bedrossian also rightly submitted that there is binding authority that, in a knowing receipt claim, a proprietary remedy over Real Property Act land is not available against a third party unless an exception to statutory indefeasibility of title under s 42 of the Real Property Act 1900 (NSW) (“Real Property Act”) is established.

92. In supplementary submissions made on 26 March 2025, Mr Sirtes and Mr Crossland in turn contended that the Court could order a constructive trust in the knowing receipt claim, notwithstanding s 42 of the Real Property Act, where the Defendants had not specifically pleaded an indefeasibility defence. I accept that may be possible in a case where the application of s 42 of the Real Property Act is not raised by the parties or the Court, but that is not this case. Mr Sirtes and Mr Crossland rightly did not submit that I was obliged to disregard the application of applicable state legislation where I had raised that matter with the parties and they had been afforded (and fully exercised) the opportunity to make submissions about the issue. I should not disregard applicable state legislation in that situation.

93. It seems to me that the case law establishes that proprietary relief by way of a constructive trust would not be available to Ms Quine in respect of Real Property Act land, in a claim for knowing receipt of trust property, absent an exception to statutory indefeasibility under s 42 of the Real Property Act. That section relevantly provides that:

“Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded …”

94. The reference to “fraud” in that section is “to be construed as meaning something more than mere disregard of rights of which the person sought to be affected had notice, and as importing something in the nature of personal dishonesty or moral turpitude” and involves “dishonesty on the part of the registered proprietor in securing his registration as proprietor”: Stuart v Kingston (1923) 32 CLR 309 at 329; [1923] HCA 17; Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 614; [1988] HCA 16 ; Gerard Cassegrain & Co Pty Ltd v Cassegrain [2011] NSWSC 1156 at [168],

95. The availability of a constructive trust in these circumstances has been considered in cases including Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd (1998) 3 VR 133 at 156-157 (“Sixty-Fourth Throne”) and Farah ConstructionsPty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [193] (“Farah”), where the High Court observed (at [193]) that:

“An exception operating outside the language of s 42(1) can exist in relation to certain legal or equitable causes of action against the registered proprietor. So far as Say-Dee was relying on Barnes v Addy [(1874) LR 9 Ch App 244 (“Barnes v Addy”)], it was certainly alleging a recognised equitable cause of action. In [Sixty-Fourth Throne], Tadgell JA (Winneke P concurring, Ashley AJA dissenting) held that a claim under Barnes v Addy was not a personal equity which defeated the equivalent of s 42(1) in Victoria, namely the Transfer of Land Act 1958, s 42(1)…”

96. In Super 1000 Pty Ltdv Pacific General Securities Ltd (2008) 221 FLR 427; [2008] NSWSC 1222 at [213]-[237], White J (as his Honour then was) undertook a full review of the case law and observed that he was bound to follow that case law and that “at least no proprietary remedy is available against Super 1000 as an accessory to Mr McLay’s breach of fiduciary duty by having taken a mortgage over the company’s property.” His Honour there left open (at [235]ff) the possibility of a personal claim, which had not there been sought.

97. In Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 (“Sze Tu”) at [225], Gleeson JA, with whom Meagher and Barrett JJA observed that:

“The High Court made clear in Farah that only certain legal or equitable causes of action against a registered proprietor operate as an in personam exception outside the indefeasibility provision in s 42(1). Farah concerned whether the in personam exception extended to claims arising under the “knowing receipt” and the “knowing assistance” limbs of [Barnes v Addy]. Farah held that they did not at ([193]–[195]); citing Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 at 156 –157; LHK Nominees Pty Ltd v Kenworthy (as administratrix of the Estate of Lionel Kenworthy) [2002] WASCA 291; 26 WAR 517 and the dissenting judgment of Davies JA in Tara Shire Council v Garner [2002] QCA 232; [2003] 1 Qd R 556 at 578 [34].”

161. Ms Quine pleads (2FASC [29G], denied Defence [29G]) that, by virtue of the contraventions alleged in 2FASC [29F], GSPL has suffered loss and damage and is entitled to an order that Ms Sullivan and/or Ms Scott compensate GSPL for that loss or damage. That claim cannot succeed where the claimed contraventions are not established. Ms Quine also pleads (2FASC [29H]-[29I], respectively not admitted and denied Defence [29H]-[29I]) that the relevant payments were made without her knowledge, notice or consent and that Ms Sullivan and Mr Scott deliberately took no steps (prior to being forced to disclose them by Court order, or on exercise by Ms Quine of her rights as shareholder of GSPL or as a unit holder of GSUT) to disclose the payments in the Expenditures Document to Ms Quine. There is no suggestion that such knowledge, notice or consent was required when she was no longer a director of GSPL. I accept that Ms Sullivan and Mr Scott did not disclose the particular transactions to Ms Quine but that does not advance the challenge to their propriety. The claim in respect of this category of transactions therefore fails.

162. It is not necessary to determine Ms Quine’s claim as to the remaining three categories, where the Defendants concede liability. The second category relates to a single transaction (item 11) being the purchase, on 4 February 2019, from Square Australia, of a point of sale device for $1,297. The Defendants conceded liability for this claim.

163. The third category relates to “Netregistry’ Payments as follows:

24   16-Sep-19   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $46.95

28   14-Oct-19   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $475.95

41   12-Oct-20   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $475.95

57   06-Oct-21   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $46.95

58   13-Oct-21   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $475.95

67   13-Oct-22   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $475.95

74   06-Oct-23   Netregistry   Purchase of services in relation to a website for the directors and/or their related entities    $56.95

The Defendants also conceded liability for this claim.

167. The fourth category of this claim relates to payment of legal fees and other expenses as follows:

47   12-Feb-21   Carter Ferguson Solicitors    Payment of legal fees for the directors and their associated entities (Invoice 1911)    $550.00

50   13-Apr-21   Carter Ferguson Solicitors    Payment of legal fees for the directors and their associated entities (Invoice 21232)    $3,933.36

52   06-May-21   Carter Ferguson Solicitors    Payment of legal fees for the directors and their associated entities (Invoice 21563)    $825.00

53   30-Jun-21   Carter Ferguson Solicitors    Payment of legal fees for the directors and their associated entities    $1,000.00

55   10-Sep-21   Carter Ferguson Solicitors    Payment of legal fees for the directors and their associated entities    $1,005.80

60   02-Apr-22   Walsh & Monaghan   Payment for services for directors and their associated entities (Invoice 20220379)    $4,400.00

64   30-Jun-22   Carter Ferguson Solicitors    Payment of legal fees for the directors and their associated entities    $454.55

72   20-Jun-23   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 28708)    $2,425.50

77   23-Jan-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 30470)    $3,324.06

78   22-Feb-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Trust Account top-up)    $7,000.00

79   22-Feb-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 29990)    $4,216.16

80   26-Feb-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 30746)    $1,001.33

82   23-May-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 31341)    $1,842.17

86   17-Jul-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Trust Account Receipt No. 3183)    $5,000.00

89   30-Sep-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 32016)    $3,386.85

90   30-Sep-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 32226)    $14,442.02

92   17-Oct-24   Anthony Lo Surdo   Payment of legal fees for the directors and their associated entities (Invoice 401623)     $8,518.40

93   17-Oct-24   Carter Ferguson Solicitors   Payment of legal fees for the directors and their associated entities (Invoice 32354)    32,433.19

168. The Defendants concede liability as to this category of transaction but rely on a set-off of reimbursement of these amounts by Ms Sullivan made on the first day of the hearing. By paragraph 29I(i) of their Defence (MFI8), the Defendants pleaded, in answer to paragraphs 29D and 29I of the Second Further Amended Statement of Claim, that they had caused monies which had been withdrawn from the bank account of GSPL to be returned to that bank account so that GSPL had not suffered loss or damage by reason of those withdrawals and/or the Defendants were entitled to rely on the return of those funds as an offsetting amount in equity or under CPA s 21. Those amounts were there particularised by reference to deposits totalling $176,042 made by Ms Sullivan to that account on the first day of the hearing on 28 January 2025 (Ex J2, 3441.28), which the Defendants acknowledged were to be treated as repayment of legal expenses incurred by GSPL and not, for example, as a loan by them or subscription for equity in GSPL.

169. I do not understand there to be any dispute that the repayment of that amount should be offset against this claim, or at least reduces GSPL’s or extinguishes recoverable loss arising from the payment of those expenses. GSPL therefore succeeds in this claim only to the extent that the amounts which were wrongly paid out by GSPL exceed the amount repaid by Ms Sullivan, and I will leave the parties to calculate that amount. The parties took no point as to interest in that regard.

Claim for misuse of the premises

170. Ms Quine pleads (2FASC [29J]-[29L], partly admitted and partly denied Defence [29J]-[29L]) that, from 1 November 2018 to the present, Ms Sullivan and Mr Scott caused or permitted EOG to rent Unit 5 in the premises; CBK to rent Units 2 and 7 in the premises; and an entity or business known as “Bam Constructions” (“Bam”) to rent Unit 4; that, throughout the period during which the EOG, CBK and Bam have rented the premises, they have paid less than market rent; and that the fact that EOG, CBK and Bam have been paying less than market rent was known to both Ms Sullivan and Mr Scott. A further claim (2FASC [29M]) in respect of the use of an outside storage area was not pressed.

171. Ms Quine in turn pleads (2FASC [29N], denied Defence [29N]) that:

“by permitting EOG, CBK and Bam to rent units in the premises for less than market rent, Ms Sullivan and Mr Scott have each, in relation to each of those matters, engaged in an exercise of power as a director of [GSPL] that was:

(a) not in accordance with the degree of care and diligence a reasonable person would exercise if they were a director of [GSPL] and occupied the office of Ms Sullivan or Mr Scott, and was conduct in breach of s 180 of the Act;

(b) not, or is not, in good faith, not for a proper purpose, and was in breach of their duties as directors under section 181 of the Act; and

(c) an improper use of the positions of each of Mr Sullivan and/or Mr Scott as directors of [GSPL] to gain an advantage for him or herself or some other person, which caused detriment to the company in breach of s 182 of the Act.”

172. The Defendants also rely in response (Defence [29P]) on aspects of cl 8 of the trust deed for GSUT as authorising the relevant conduct.

173. Ms Quine’s claim here turns on the assumption, unsupported by evidence or by any case law to which Mr Crossland drew attention, that it is necessarily a breach of the Act for the directors of a company or corporate trustee to permit it to make a product or service available at less than market value or on discounted terms to a shareholder or unitholder, either generally or over the objection of a minority shareholder. No doubt, that course may have tax implications and may, in the case of a public company, require approval under Ch 2E of the Act. However, I do not accept that there is any general rule of law or corporate practice that prohibits a company taking that course, or its directors authorising or permitting it to take that course, and the essential premise of this claim is not established. This claim must fail for that reason.

174. It is therefore not necessary to address Ms Quine’s consequential claim (2FASC [29O], denied Defence [29O]), by virtue of the alleged contraventions of the Act, that Ms Sullivan and/or Ms Scott compensate GSPL for the damage suffered by it pursuant to s 1317H of the Act in the amount of $995,243.63 or some different amount.

Oppression

175. Ms Quine seeks (OP [1]) a declaration that the affairs of GSPL are being conducted in a way that is oppressive to, or unfairly prejudicial to, or unfairly discriminatory to her and (OP [4]) an order, under s 233 of the Act, that GSPL be wound-up. I note, for completeness, that Ms Quine initially sought orders that the relevant Defendants sell their shares in GSPL and their units in GSUT to her for a “sum to be determined by the Court”, but rightly abandoned that relief in an amendment to the Originating Process where she had not led adequate evidence to support a determination of the question of the value of those shares and units. The Defendants indicated that they would consent to a different order that they buy out Ms Quine’s shares and units, but that was not to the point where Ms Quine did not seek that different order. The Defendants did not pursue any amendment to their Cross-Claim to introduce a claim for such an order and ultimately did not press such an order.

176. The applicable principles in respect of oppression are well-established and I have drawn my summary of them from my judgment in Re Gunyahweh Pty Ltd [2023] NSWSC 1133 at [130]ff. Section 232 of the Act provides that the Court may make an order under s 233 if:

“(a)   the conduct of a company’s affairs; or

(b)   an actual or proposed act or omission by or on behalf of a company; or

(c)   a resolution, or a proposed resolution, of members or a class of members of a company;

is either:

(d)   contrary to the interests of the members as a whole; or

(e)   oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.”

177. Section 53 of the Act in turn identifies the “affairs of a body corporate” for several provisions of the Act, including s 232, as including the “promotion, formation, membership, control, business, trading, transactions and … dealings of the body” (s 53(a)) and “the internal management and proceedings of the body” (s 53(c)). The orders which may be made include, relevantly, an order for the purchase of any shares by any member (s 233(1)(d)) and an order that a company be wound up (s 233(1)(a)).

178. Section 232 of the Act and its predecessors extend to conduct involving “commercial unfairness” or where the conduct complained of involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play, or a decision has been made so as to impose a disadvantage, disability or burden on the plaintiff that, according to ordinary standards of reasonableness and fair dealing, is unfair: Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 704; Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68. Conduct may be oppressive even when a defendant believes that he or she is acting for proper purposes: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; (2009) 257 ALR 610; [2009] HCA 25 at [176]. The principles applicable to a claim for oppression were summarised by Austin J in Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [39], and the Court of Appeal noted the parties did not challenge that summary of the applicable principles in Tomanovic v Global Mortgage Equity Corporation Pty Ltd (2011) 288 ALR 310; (2011) 84 ACSR 121; [2011] NSWCA 104 (“Tomanovic (2011 NSWCA)”) at [140]. Austin J there observed that:

“(a)   consistent with the principle that the purpose of relief is to terminate the effects of oppression, relief will generally be inappropriate as a matter of discretion if there is no continuing oppression: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, at [182]; [2009] HCA 25;

(b)   unfairness is assessed by reference to whether “objectively in the eyes of a commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair”: eg, Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359, per Basten JA at [181]; [2008] NSWCA 95;

(c)   while it is recognised that conduct may be oppressive if inconsistent with the “legitimate expectations” of shareholders, expectations are not immutable. The non-fulfilment of expectations will not establish oppression, if there has been some good reason for the extinguishment of the expectation: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672, at [85], [86], [175]; [2001] NSWCA 97; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343, at [96]; [2009] NSWSC 342 per Barrett J;

(d)   “it is important when assessing corporate activities to see if there has been oppression that judges do not remain in their ivory tower”: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688, Young J at 739; [1998] NSWSC 413;

(e)   a particular matter which will be taken in account in assessing the gravity of any allegation of oppression, is the extent to which the minority shareholder has “baited” the majority shareholder to act in an oppressive manner: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1988) 28 ACSR 688, at 741; [1998] NSWSC 413 …”

179. I now turn to the pleaded factual basis of this claim. Ms Quine pleads (2FASC [7]; denied Defence [7]) that, from 20 August 2015, GSPL operated as a quasi-partnership in which Mr and Mrs Quine, Mr Scott and Ms Sullivan were the quasi-partners and particularises that claim on the basis that, inter alia:

“The intention of the Quines, Mr Scott and Ms Sullivan in establishing the [GSUT] structure in the fashion above and taking steps for [GSPL] to acquire the [p]remises and run the storage business was in part to provide each of those persons (the Quines, Mr Scott and Ms Sullivan, as well as their family members) with premises from which they could operate their respective businesses.”

I recognise, in that respect, that Ms Quine was not then either a director or shareholder in GSPL although she was a unitholder in GSUT. It is not necessary to reach a finding as to this matter in order to determine the proceedings.

180. Ms Quine contends (2FASC [19]-[20]) that, from November 2022 to date, Ms Quine made several requests of GSPL, Mr Scott and Ms Sullivan to permit Ms Quine to inspect the books of account of GSPL and GSUT and that GSPL continues to refuse to provide access to GSUT’s electronically stored accounting records for the period from March 2021. The Defendants contend (Defence [22]) that Ms Quine was given access, in October 2024, to electronically stored accounting records for GSUT for the period from 11 March 2021.

181. It is broadly common ground (2FASC [21]-[23], Defence [23]-[25]) that, on 17 October 2023, GSPL issued Ms Quine an eviction notice relying on her rent being in arrears in the sum of $20,693.12 dating back to March 2021. It is plain enough that Ms Quine had in fact failed to pay that rent. On 10 November 2023, Ms Quine vacated the relevant premises.

182. Ms Quine also pleads (2FASC [24]-[27]) a delay by GSPL in paying her a dividend for the financial year 2022 and that:

“Ms Sullivan and Mr Scott withheld the dividend payment to put pressure on Ms Quine to sell her shares in [GSPL] [and units in GSUT] to Ms Sullivan and Mr Scott (through their related entities) and vacate the [p]remises.

In the alternative, Ms Sullivan and Mr Scott’s decision to withhold payment of Ms Quine’s dividend for a period in excess of 12 months was unreasonable and excessive.”

The Defendants respond (Defence [26]-[29]) that GSPL’s financial results were not approved until early May 2023; the dividend payment to Ms Quine for the financial year ending 2022 was withheld to offset unpaid rent that she owed to GSPL in the amount of $20,826.47; and the payment of a distribution on the units was also withheld because she failed to pay rent.

183. The evidence does not establish that Ms Sullivan or Ms Scott withheld the dividend payment to put any such “pressure” on Ms Quine, although I accept that they likely wished to confirm that Ms Quine had vacated the premises where she had failed to pay the rent due in respect of them. It is not necessary to decide whether that conduct was “unreasonable” or “excessive”, judged against an undefined standard and where Ms Quine had not paid that rent, where it is not necessary to determine Ms Quine’s oppression case for the reasons noted below. Ms Quine did not contend, as she might have, that the failure to pay the dividend contravened applicable provisions of the Act.

184. Ms Quine also pleads (2FASC [29], denied Defence [31]) that several acts and omission by Ms Sullivan and Mr Scott on behalf of GSPL are, or have been, oppressive to Ms Quine. Those acts are pleaded as:

“(a)   excluding Ms Quine from participating in the management of the business by removing her directorship in circumstances where [GSPL] and [GSUT] operated as a quasi-partnership;

(b)   failing to take steps to pay Ms Quine her [GSUT] dividend within a reasonable time;

(c)   withholding payment of Ms Quine’s [GSUT] dividend until she vacated the [p]remises;

(d)   failing to provide Ms Quine full and proper access to the books of account of [GSPL] and [GSUT];

(e)   frustrating and delaying Ms Quine’s ability to access the books of account of [GSPL] and [GSUT], which, among other things, frustrates her ability to determine whether [GSPL] and [GSUT] are being managed fairly and in accordance with the law;

(f)   providing their related entities the use of the [p]remises at less than market rent to the detriment of Ms Quine’s beneficial interest [GSUT];

(g)   issuing an eviction notice for rental arrears in circumstances where Ms Sullivan and Mr Scott caused [GSPL] to withhold payment of Ms Quine’s dividend which would have covered the rental arrears;

(h)   causing [GSPL] to rely on the absence of a written lease agreement as basis to terminate Ms Quine’s implied tenancy on 31 days’ notice, in circumstances where Ms Sullivan and Mr Scott jointly refused to cause [GSPL] to enter into a written lease with Ms Quine and the related entities;

(i)   transferring, or causing the transfer of the [p]remises to [GCH] in the circumstances and for the purposes in 29A-29B and as particularised there;

(j)   making the Payments set out in the Expenditures Document for the reasons set out there;

(k)   choosing not to disclose to [Ms Quine] the Payments, except when obliged to do so by Court order or when Ms Quine sought to exercise her rights as shareholder of [GSPL] or as a unit holder of the unit trust; and

(l)   engaging in the conduct pleaded at 29D-29O [namely payments to companies associated with Mr Scott and Ms Sullivan and allowing occupancy of the premises at less than market rates].

185. It is not necessary to determine the oppression claim where it is common ground between the parties and I find below that I should make a winding up order in respect of GSPL on the just and equitable ground, where the present position is not tenable and no alternative relief is available. However, I will briefly address the conclusion that I would likely have reached as to some of these matters had it been necessary to determine them.

186. Ms Quine here relies (2FASC [29(a)]) on the fact that she was removed as a director of GSPL. I have noted that matter above and noted that the suggestion that the arrangement was a quasi-partnership, at least with Ms Quine, is weakened by the fact that she was not initially either a shareholder or a director of GSPL, although she was a unitholder in GSUT. Ms Quine also relies (2FASC [29(b)-(e)]) on the delay in payment of a dividend to Ms Quine and the long delay in allowing access to financial records. I have noted those matters above and they would, with other matters, have provided support for an oppression claim.

187. Ms Quine relies (2FASC [29(f)], [29(l)]) on the occupation of part of the premises at less than market rates above. Had it been necessary to determine that matter, I would likely have found that it did not support the oppression claim where it was not unlawful; was consistent with the basis on which the parties’ arrangements were established and contemplated by the terms of GSUT; and that benefit was available to Ms Quine until she ceased to occupy the premises following her failure to pay any rent. Ms Quine also relies (2FASC [29(g)-(h)]) on the issue of an eviction notice to her. I would not have found that matter to be oppressive where she had chosen not to pay the rent for the part of the premises she occupied, and I do not consider that the existence of a wider dispute or the delay in payment of dividends alters that matter.

188. Ms Quine relies (2FASC [29(i)]) on the circumstances of the transfer of the land out of GSPL to QHC in admitted breach of trust and I would have found that matter, alone or with other matters, was sufficient basis for relief in oppression. Ms Quine also relies (2FASC [29(j)], [29(l)]) on payments made to entities associated with Mr Scott and Ms Sullivan. I would not have found that the payments for services to CBK and EOG supported the oppression claim, for the reasons that they also did not support the claim for breach of directors duties, but I would have found that the payment of all or a large part of the Defendants’ costs of the proceedings out of GSPL’s assets was plainly oppressive and sufficient to establish the basis for a winding up order. However, I will ultimately make that order on the just and equitable ground, for the reasons noted below.

The claim to winding up on the just and equitable ground

189. Ms Quine also seeks an order to wind up GSPL on the just and equitable ground. Ms Quine pleads (2FASC [30], admitted defence [32]) that it is ‘just and equitable’ to wind up GSPL, in circumstances where:

“(a)   the dispute between the parties has caused a substantial loss of trust and confidence between them, resulting in an irretrievable breakdown between the members;

(b)   there has been serious oppression in management of the company’s affairs, as pleaded in paragraph [31]; and

(c)   [GSPL] and [GSUT] can no longer serve the purpose for which it was intended to operate.

190. The "just and equitable" ground for winding up a company in s 461(1)(k) of the Act is not limited by particular categories: Re CNPR Limited [2018] NSWSC 989 at [8] and Re Spitfire Q Pty Ltd [2021] NSWSC 866 at [12]. Where a company was established on a basis of relationships of mutual confidence, a winding up order may be made on the just and equitable ground under s 461(1)(k) of the Act where irreconcilable differences emerge between its members: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; [2001] NSWCA 97 (“Fexuto”) at [89]; Nassar v Innovative Precasters Group Pty Ltd (2009) 71 ACSR 343; [2009] NSWSC 342 (“Nassar”) at [97]–[98]. The circumstances in which the Court may make a winding up order under s 461(1)(k) of the Act also include circumstances where the substratum of the company has failed: Re Catombal Investments Pty Ltd [2012] NSWSC 775 at [19]ff.

191. In Re Amazon Pest Control Pty Ltd [2012] NSWSC 1568 (“Amazon Pest Control”) at [17], I observed that:

“… a winding up order is sought under s 461(1)(k) of the [Act]. That section permits the Court to make a winding up order where it is of the opinion that it is just and equitable that a company be wound up. Although the circumstances in which such an order can be made are not closed or rigid, they include circumstances where a company was formed on the basis of a personal relationship involving mutual confidence and that confidence has broken down so that continuation of that association would be futile: [Fexuto]; Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd [2008] VSCA 86; (2008) 66 ACSR 325 at [119]; [Nassar] at [90], [96], [117].

Such an order may more readily be made where a company is in the nature of a quasi-partnership and there has been a loss of trust and confidence in respect of the entities: Ebrahimi v Westbourne Galleries Ltd [1973] AC 360. It has been suggested that the language of "quasi-partnership" can be misleading and this issue is better approached by reference to whether the Company is "a majority controlled business requiring material cooperation and a level of trust": MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; (2004) 63 NSWLR 167 at [71]; [Nassar] at [77]-[79]. There are various indications of the fact that the Company was in the nature of a "quasi-partnership" including that each of [two parties] became directors and secretaries; each of them acquired one of the two issued shares in it; and each became a signatory to the Company's bank account. The arrangements for their acquisition of the [relevant] property are consistent with that characterisation, although they purchased it personally and it was then leased to the Company.

A breakdown of relations or loss of confidence between a company's members may also support a winding up on the just and equitable ground where it frustrates the commercially sensible operations of the company in accordance with the incorporator's expectations and any loss of confidence is justified: Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [49]-[51], on appeal as [Tomanovic (2011 NSWCA)]. The Court may make a winding up order under s 461(1)(k) of the [Act] in circumstances that do not amount to oppression, although a person who is themselves responsible for the breakdown of the relationship is less likely to be afforded relief: [Fexuto]; [Nassar] at [90], [96], [117]. A winding up order in these circumstances is not "lightly made" and must be "just and equitable not just for the applicant, but for all": Re G Jeffrey (Mens Store) Pty Ltd (1984) 9 ACLR 193; Byrne v AJ Byrne Pty Ltd [2012] NSWSC 667 at [81].”

192. In Read-Zorn v Origin Distillers Group Pty Ltd [2023] FCA 280 at [19]-[23], Jackman J summarised the applicable principles as follows:

“Winding up on the just and equitable ground has been recognised as applicable in a number of conventional categories, such as where the substratum of the company has failed, where management of the company’s affairs is in deadlock or disagreement, where the company’s formation involved fraud, where there has been misconduct on behalf of the company’s directors, where there is a constitutional or administrative vacuum in the company’s management, and where there is a lack of fairness, confidence and commercial morality in the company’s affairs: Catombal Investments Proprietary Limited [2012] NSWSC 775 at [19] (Brereton J).

In that case, Brereton J said at [20] that the Court is not restricted to those scenarios, as the term “just and equitable” is broad and a party may seek an order under s 461(1)(k) of the [Act] whenever there is something:

[affecting] him or her in [their] relations with the company or shareholdings, at least so long as those circumstances have a direct and immediate relationship to, or bearing upon, the management or administration of the affairs of the subject company, or the conduct of its business.

His Honour also pointed out that whether winding up is just and equitable is a question of fact, in respect of which each case will depend on its own circumstances. A well-established circumstance is where mutual cooperation and a level of trust are essential for the smooth running of the company’s day-to-day management. As Barrett J said in [Nassar]:

Winding up is the characteristic remedy in circumstances where a working relationship predicated on mutual cooperation, trust and confidence has broken down.

Similarly, the New South Wales Court of Appeal in [Fexuto] at [89] said that the jurisdiction to order winding up on the just and equitable ground may be exercised in circumstances that do not amount to oppression, unfair prejudice or unfair discrimination, particularly so where “irreconcilable differences” between shareholders have led to an irretrievable breakdown in a “personal relationship involving mutual confidence”.

Similarly, in Mudgee Dolomite & Lime Pty Ltd v Murdoch [2020] NSWSC 1510, the company which was established on the basis of a relationship of mutual confidence suffered irreconcilable differences emerging between the members. In that case, the personal relationship between the parties failed and, ultimately, actions such as unwillingness to sign documents or attend meetings caused the disintegration of the relationship and, subsequently, a reason for the court to wind up the company on the just and equitable ground.”

193. In Haycraft v AF1 Services Pty Ltd [2023] FCA 774 at [73]ff, Stewart J observed that:

“… the existence of irreconcilable differences among persons involved in what is, in effect, a partnership, will destroy the personal relationship involving mutual confidence that lies at the heart of the partnership analogy; the destruction of the personal relationship establishes a basis for granting relief: [Fexuto] at [89] per Spigelman CJ.

An order may more readily be made where there has been a loss of trust and confidence, or the loss of confidence frustrates the commercially sensible operations of the company in accordance with the incorporator’s expectations and such loss is justified: Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749 at [277] per Rees J.

A breakdown or loss of confidence between directors and shareholders does not necessarily provide a sufficient foundation for winding up on the just and equitable ground — it is generally necessary to show that the breakdown is of such a nature and degree that it materially frustrates the commercially viable and sensible operations of the company in accordance with the shareholders’ expectations, that the loss of confidence is justified and that there is a restriction on the transferability of the shares of the party seeking to wind up the company: Re L&B Seafood Pty Ltd [2022] NSWSC 100 at [148] per Henry J.

Although irreconcilable differences may establish a basis for winding up, a court is less likely to grant such relief if the person excluded from management as a result of irreconcilable differences was responsible for the breakdown of the relationship: Crow Inn at [278]. …

Where winding up is sought on the basis of a complete deadlock between two opposing camps, the breakdown must result in such a departure from the basis on which the company was formed or operated so as to make it just and equitable that the company be wound up: Mir v Mir [2023] NSWSC 408 at [107] per Ball J.”

194. Section 467(4) of the Act applies where a winding up order is sought on the just and equitable ground and requires the Court to have regard to the availability of some other remedy and whether a plaintiff would be acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy. However, there is no absolute rule that the Court will not wind up a solvent company, although winding up is a last resort: Re Pure Nature Sydney Pty Ltd [2018] NSWSC 914 at [76]. In Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd (2018) 125 ACSR 227; [2018] QCA 048, McMurdo JA noted (at [46]) that:

“In my view, the reasonableness of the applicant’s position is to be assessed by reference to the consequences of the events and circumstances upon which the application is founded and what is necessary to redress them. If they could be redressed only by a winding up, then the pursuit of a winding up order would not be unreasonable in the relevant sense. On the other hand, if there is an alternative remedy which would equally redress those consequences, then an applicant’s preference for a winding up order would usually be considered to be unreasonable, because ordinarily the winding up of a solvent company will have far reaching effects. It will not only deprive the other shareholders of their investment in a solvent enterprise, but it will also be likely to affect the interest of others, such as the company’s employees and third parties whose interests from transacting business with the company would be affected. It is the likelihood of substantial and wide ranging prejudice of this kind which would cause judges to describe a winding up of a solvent company in this context as an extreme step.”

195. In Snell v Glatis (No 2) [2020] NSWCA 166 (“Snell”), the Court of Appeal considered the comparative merits of a buy-out order and a winding up, in the context of an asset-holding company. Leeming JA (with whom Bell P and Meagher JA agreed) there held that an order made by the trial judge for the defendant to buy out a plaintiffs’ minority shareholdings in a group of companies should not have been made where there was insufficient evidence that the defendant could comply with that order within the specified timeframe, the company was not running a business but collecting rents on leased property, and winding up was a realistic means of securing to the plaintiffs their share of the value of the group and preventing ongoing oppression. Bell P (as the Chief Justice then was) also there observed (at [6]) that:

“Although statements may be found in the authorities that winding up is a last resort remedy in a case where oppression is found … the context in which the particular company or companies operate together with their structure and history will always be relevant to the fashioning of appropriate discretionary relief and generalised statements as to, for example, the inappropriateness of ordering winding up in cases of oppression other than as a last resort do not mean that that remedy should not be considered, in an appropriate case, even if neither party in fact seeks it.”

196. In Russell v Lee Holdings Pty Ltd (No 3) [2020] WASC 346, where the parties had exchanged buy-out offers and asserted their capacities to meet any orders made to that effect, Martin J treated the Court of Appeal’s decision in Snell as a counterweight to the authorities describing winding up as a remedy of last resort. In Re Crow Inn Pty Ltd (No 2) [2020] NSWSC 1749, Rees J referred to Leeming JA’s observation in Snell that the circumstances in which a shareholder must realise assets in order to meet a buy-out order lend themselves to the appointment of a liquidator for the purposes of ensuring that occurs independently of the parties. Although each party had there sought buy-out orders, Rees J instead ordered that the companies be wound up.

197. I am satisfied that an order to wind up GSPL on just and equitable grounds is properly made here given the failure of the relationship between the companies’ directors and shareholders; given the recent transfer of the land in breach of trust and the improper application of GSPL’s assets to payment of the costs of defending these proceedings to the advantage of Mr Scott and Ms Sullivan; and where neither party sought an order to buy out the shares and units of the other or led adequate evidence to support such a valuation or establish its capacity to fund a buy-out order.

198. Consistent with the lack of agreement between the parties as to the majority of issues in the proceedings, they also disagreed as to the identity of the liquidator to be appointed to GSPL, and invited the Court to resolve that disagreement, although they did not make any substantive submissions that the appointment of either liquidator was preferable to the appointment of the other. This issue is simply resolved where the Court’s ordinary practice, in an application for a winding up order, is to appoint the Plaintiff’s nominee, absent reason to the contrary, and the Defendants had not identified any reason not to take that course. For these reasons, I will appoint Mr Daran, who is nominated for appointment by Ms Quine and has consented to appointment, as liquidator of GSPL.

The appointment of a receiver to GSUT

199. As I noted above, Ms Quine also sought an order that the liquidator appointed to GSPL be appointed as receiver of the assets of GSUT. Section 67 of the Supreme Court Act 1970 (NSW) provides that the Court may, at any stage of the proceedings, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient to do so, and there are many cases in which the Courts have made such an appointment in favour of a liquidator appointed to a trustee company in respect of trust assets. That appointment can be made on the basis of a former trustee’s right of indemnity and exoneration in respect of trust assets, which is available even where a trustee’s office is vacated by reason of the appointment of a liquidator to the trustee company: Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FLR 17; (2014) 103 ACSR 401; [2014] NSWSC 1484; Re Double Bay Property Management Pty Ltd (in liq) [2020] NSWSC 203; Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866; Re Munja Bakehouse Pty Ltd [2024] NSWSC 6 at [30]. I will make that order, where I will make a winding up order.

Orders

200. I direct the parties to bring in agreed short minutes of order to give effect to this judgment, including as to costs, within 14 days and, in the event of disagreement, their respective draft orders and submissions not exceeding 5 pages in Arial font 12, one and a half spacing as to the differences between them.

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Endnote

Decision last updated: 02 April 2025