In the matter of Khoury Taxation Services Pty Ltd

Case •

[2025] NSWSC 568

•

03 June 2025

Supreme Court


New South Wales

Medium Neutral Citation: In the matter of Khoury Taxation Services Pty Ltd [2025] NSWSC 568
Hearing dates: 20 May 2025
Date of orders: 3 June 2025
Decision date: 03 June 2025
Jurisdiction:Equity - Corporations List
Before: Black J
Decision:

Orders requiring transfer of two shares in a company to beneficiaries of director’s estate not made because director found to be registered owner of only one share.

Catchwords:

CORPORATIONS – Shares – Transfer – Whether estate of deceased company director entitled to one or two company shares – Where prior purported transfer of a share was not effective – Orders not made

Legislation Cited:

- Corporations Act 2001 (Cth), ss 251A, 1071B, 1071F, 1072F, 1072G, 1274B, 1305

- Evidence Act 1995 (NSW), s 136

Cases Cited:

- Armagas Ltd v Mundogas SA [1985] 1 Ll R 1

- Australian Securities and Investments Commission v MacDonald (No 11) (2009) 256 ALR 199; (2019) 71 ACSR 368; [2009] NSWSC 287

- Barboutis v Kart Centre Pty Ltd (No 2) [2020] WASCA 41

- Claremont Petroleum NL v Cummings (1992) 110 ALR 239; (1992) 9 ACSR 1; (1992) 10 ACLC 1685

- Embedded Claims Pty Ltd v Litigation Finance (Australia) Pty Ltd [2023] FCAFC 30

- ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

- Galladin Pty Ltd v Aimnorth Pty Ltd (in liq) (1993) 11 ACSR 23; (1993) 11 ACLC 838

- Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725

- Imperial Chemical Industries Plc v Echo Tasmania Pty Ltd [2007] FCA 1731

- Jun Bom Ku v Dong Soon Song (2007) 63 ACSR 661; [2007] FCA 1189

- Nordern Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd [2024] FCA 845

- Re 1derful Pty Ltd [2024] NSWSC 1414

- Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789

- Re DCA Enterprises Pty Ltd (2023) 166 ACSR 156; [2023] NSWSC 11

- Varma v Varma [2010] NSWSC 786

- Watson v Foxman (1995) 49 NSWLR 315

- Wood v Inglis (2008) 68 ACSR 420; [2008] NSWSC 1147

Category:Principal judgment
Parties: Ann Therese Khoury (Plaintiff)
Khoury Taxation Services Pty Ltd (First Defendant)
George Khoury (Second Defendant)
Peter Joseph Khoury (Third Defendant)
Representation:

Counsel:
K Kutasi (Solicitor) (Plaintiff)
P Travis (Defendants)

Solicitors:
Solve Legal (Plaintiff)
Small Myers Hughes Lawyers (Defendants)
File Number(s): 2024/441253

JUDGMENT

Nature of the proceedings

  1. By Originating Process filed on 27 November 2024, the Plaintiff, Ms Ann Khoury (“Executor”), who is the executor and trustee of the Will of the late Donald Khoury (“Deceased”) and has received a grant of probate of the Will, seeks orders under s 1071F of the Corporations Act 2001 (Cth) (“Act”) requiring the parties to transfer two ordinary shares held by the Deceased in the First Defendant, Khoury Taxation Services Pty Ltd (“Company”) to Ms Jacqueline Nader (to whom I will refer, without any disrespect, as “Jacqueline”) and Mr Nathan Khoury (to whom I will refer, without any disrespect, as “Nathan”) and ancillary orders.

  2. The Second Defendant, Mr George Khoury (to whom I will refer, without any disrespect, as “George”), is one of the two current directors of the Company and owns one-third of the ordinary issued shares in the Company. The Third Defendant, Mr Peter Khoury (to whom I will refer, without any disrespect, as “Peter”), is the other current director of the Company and is the son of Mr Joseph Khoury (to whom I will refer, without any disrespect, as “Joseph”). Joseph previously held one share in the Company and, depending on the resolution of the issues in dispute, may continue to hold that share.

  3. By way of background, the Company conducts a business, the activities of which include providing professional accounting services. It is common ground that the Deceased held one ordinary share in the Company and that Jacqueline and Nathan are entitled to a transfer of that share to them. The issue in dispute in the proceedings is whether the Deceased held a second ordinary share in the Company so as to leave that share to them under his Will. It appears to be common ground that the replaceable rules applied to the Company and the parties made submissions on that basis, although that was not admitted in the Defendants’ Defence (“Defence”) (Defence [2]).

  4. It also is common ground (Statement of Claim (“SoC”) [7], Defence [3]) that the Company’s original directors and shareholders were the Deceased, Joseph and George and that each of them held one ordinary share in the Company. It is also common ground (SoC [9]-[10], Defence [3]) that Peter became a director of the Company on 23 January 2008 and Joseph ceased to be a director on 1 January 2016. It is also common ground (SoC [11]-[12], Defence [3]) that, by his Will dated 11 December 2017, the Deceased left his “shares” in the Company to Jacqueline and Nathan. As I noted above, the primary issue in dispute (SoC [13], Defence [4]) is whether he was then the registered holder of one or two shares in the Company, which could be transferred as the subject of that gift. The Plaintiff relies on the records maintained by the Australian Securities and Investments Commission (“ASIC”) in that respect to establish that the Deceased then held two shares in the Company. The parties then plead (SoC [17]ff, Defence [5]) the Executor’s request that the Deceased’s two shares in the Company be transferred to Jacqueline and Nathan, which was not met where there was a disagreement between the parties as to whether one or two shares should be transferred.

Affidavit evidence

  1. I will briefly refer to the affidavit evidence, which is in narrow scope, before turning to a chronology of events. I will determine several disputed issues, so far as it is necessary in order to determine the proceedings, in dealing with that chronology below. In addressing this evidence and determining those issues, I have regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Varma v Varma [2010] NSWSC 786 at [424]-[425]. I also have regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Ll R 1 at 57; Re Colorado Products Pty Ltd (in prov liq) (2014) 101 ACSR 233; [2014] NSWSC 789 at [10]; ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [27]-[28]. I have here drawn on my summary of the applicable principles in, inter alia, Re 1derful Pty Ltd [2024] NSWSC 1414 at [7]ff.

  2. The Executor reads her affidavit dated 12 February 2025, which refers to the circumstances in which the Company was established and the Deceased’s brothers, George and Joseph, joined the Deceased in that business. Her evidence (admitted with a limiting order under s 136 of the Evidence Act 1995 (NSW) (“Evidence Act”) as her understanding and not proof of the fact) is that, at the date of the Deceased’s death, he held two shares in the Company, and she refers to the reference to “shares” in the Deceased’s Will in that regard. The Executor also refers to the subsequent developments, by which the two shares which she understood Mr Khoury held in the Company were not transferred to Jacqueline and Nathan and to correspondence between the legal representatives in that regard. I will address those events in dealing with the chronology below. The Executor was not cross-examined.

  3. The Executor also reads Jacqueline’s affidavit dated 17 February 2025, which addressed her employment at the Company between 1995 and 2005 and again from 2014. She referred to the manner in which records of share transfers and relevant shareholding documents were kept in a folder at the Company, and refers to a conversation with an employee of the Company in mid-2024 where the employee showed her relevant documents and said, apparently with reference to events to which I refer below (Jacqueline 17.2.25 [11]):

“Peter did not want the share. Joseph told me to give the share back to Don.”

  1. Jacqueline also refers to conversations with Peter in which Peter said that he had told the Deceased that he did not want to be a part of any of the Deceased’s companies and to subsequent dealings with the relevant company records, by which they passed into the possession of George or possibly the Defendants’ solicitors. I will refer to her evidence as to other matters in dealing with the chronology below. Jacqueline and Nathan were also not cross-examined.

  2. By his affidavit dated 18 February 2025, Nathan set out the structure of the business (in evidence admitted with a limiting order under s 136 of the Evidence Act as submission) and to his having worked the Deceased in the business. I will refer to aspects of his evidence below. Nathan was not cross-examined.

  3. The Defendants read Peter’s affidavit dated 21 March 2025. Peter’s evidence was that he has worked in the Company’s business since 1991, and he has been a director of the Company since January 2008. I will refer to aspects of his evidence in dealing with the chronology below. Peter was vigorously cross-examined. While he was plainly aware of the issues in the proceedings, I accept his evidence of critical events, including his non-attendance at relevant directors’ meetings of the Company, which seems to be consistent with the objective probabilities. For completeness, Peter’s evidence is that he had searched the Company’s books and records for a register of members and share transfers and had not located either and that, on or about 6 December 2024, when these proceedings were on foot, he caused a register of members to be prepared which reflects the position for which the Defendants contend.

  4. Peter was cross-examined and extensively challenged as to his evidence. I recognise that Peter was cross-examined as to several later purported minutes of meetings of directors of the Company which purported to pass solvency resolutions, and those minutes are inconsistent with his evidence that no such directors’ meetings took place, unless they are also documents of convenience. Peter was also cross-examined about information provided by ASIC to the Company each in the relevant period which recorded the Deceased as holder of two shares in the Company, and the Company’s failure to correct that position. It does not seem to me that that advances the Executor’s position, where that failure is consistent with an informal arrangement by which the Deceased held the relevant share for Joseph or Peter, and cannot establish the steps which were necessary to bring about a change of registered ownership of the share from Joseph to the Deceased in the first place. It is not necessary to reach any wider finding as to Peter’s credit or his evidence in order to determine the proceedings.

  5. The Defendants also read Joseph’s affidavit dated 21 March 2025, which I will address in dealing with the chronology below. Joseph was elderly and, at least at one point in his cross-examination, a degree of confusion arose as to whether he could recall being shown, by his solicitor, several of the documents to which reference was made in his affidavit. Having said that, Joseph presented as a credible witness and I accept his evidence of the nature of the arrangement which he discussed with the Deceased, which I address below, and his denial in his affidavit evidence and in cross-examination that he was present at purported directors’ meetings which are alleged to have approved the relevant share transfers. Mr Kutasi, who appears for the Executor submits that Joseph had prepared his evidence and, intended to communicate the theme that he did not transfer his share to the Deceased and pointed to one lengthy answer given by Joseph that was consistent with that theme. I accept that Joseph wished to communicate that position, but it does not follow from that wish that that position was not true.

  6. I recognise that George did not give evidence. The Executor submits, and I accept, that I should draw an inference that his evidence would not have assisted the Defendants. That does not assist the Plaintiffs where the Defendants did not need assistance from George’s evidence, where the Plaintiffs had not established their case and Peter and Joseph had given evidence in response to it.

Chronology

  1. It appears that Joseph was diagnosed with cancer for the second time in 2016 and sought to retire from the Company’s business. Peter’s evidence is that Joseph then told him that he wanted to transfer his share to him, but Peter did not then want a transfer of that share, because he was concerned that the Company’s liabilities to the Australian Taxation Office may impact on his ability to borrow money to buy property or build a house. Joseph’s evidence is that he told Peter, in about 2016, that he wanted to transfer his share in the Company to Peter and Peter replied that it would not be a good time for him to take the share. Joseph’s evidence is also that (Joseph 21.3.25 [5]):

After I had that conversation with Peter, I had a discussion with [the Deceased] about my retirement and ongoing involvement in the Company. We discussed removing me as a director of the Company and for my share to be held on trust for Peter by either Don or George. [The Deceased] replied that he would discuss it with George and said one of them could hold my share for Peter. Neither of us ever raised the prospect of [the Deceased] taking my share absolutely, as a gift or otherwise. I would remember any such suggestion because I always intended to pass down the equity I had built at the Company since 1978 to my son, Peter. I prepared my last Will and Testament on 4 September 2001, which states: ‘I give all my shares in [the Company] to my son Peter Khoury’.”

  1. That arrangement likely reflected Joseph’s then wish to receive a pension. I accept that a conversation of that kind took place in which there was at least a reference to the Deceased or George holding the relevant share for Peter, and it is not necessary to decide whether there was also a reference to a “trust” in that conversation. Joseph’s evidence is, and I accept, that he never signed a share transfer form or other document to transfer his share in the Company to the Deceased, George or anyone else.

  2. A handwritten note made by an employee of the Company on 28 June 2016 (Ex P1, CB 106) recorded that the Deceased had advised:

“Resign [Joseph] & Transfer to [the Deceased] or George at 01/6/16.”

That instruction indicated a degree of informality in the relevant process, which is not consistent with a concluded arrangement or any then intent to transfer an economic interest in an ongoing business on any final basis, so far as the instruction apparently left it to the staff member to determine where that share would be transferred to the Deceased or to George. That instruction suggests that any arrangement that was then reached, whatever its legal form, did not contemplate the transfer of any economic interest in the Company from Joseph to the Deceased on a long-term basis.

  1. Minutes of a meeting of the directors of the Company purportedly held on 28 June 2016 (Ex D1, CB 178) record that George, the Deceased, Joseph and Peter were present and approved a notice of resignation of Joseph as a director of the Company and also approved a share transfer from Joseph to the Deceased of one ordinary class share, with the effect that Donald would then hold two ordinary shares in the Company. In his affidavit evidence, Peter denies having attended a meeting of the directors on 28 June 2016 and denies having ever attended a meeting of the Company’s directors or been involved in a transfer of Joseph’s share in the Company to the Deceased. Joseph’s affidavit evidence, which is consistent with Peter’s evidence, was also that he did not attend this meeting. Joesph also denies being present at the meeting recorded in the minutes of meeting of 28 June 2016

  2. I think it more likely than not that the minute of this meeting was a record of convenience, of the kind that is sometimes brought into existence in respect of proprietary companies, which likely reflected an informal arrangement by which a share in the Company was to be held by the Deceased or George rather than Joseph, where Joseph sought to retire and receive the pension and Peter was not ready to take a transfer of that share. However, the resolution recorded in that minute cannot take effect as though it was passed at a meeting of the directors of the Company, where no such meeting took place. It also cannot take effect by any form of unanimous consent, where I accept Joseph’s evidence that he did not consent to a transfer of the shares to the Deceased on a basis that would permanently deprive him and Peter of the economic interest in the Company represented by that share. That finding is sufficient to determine the proceedings, because it has the consequence that the Company’s directors did not approve a transfer of Joseph’s share to the Deceased and Joseph remains the owner of that share. While I address the Deceased’s subsequent dealings with that share below, they do not affect the outcome of the proceedings because the Deceased had never become the registered holder of that share.

  3. In his affidavit evidence, Peter also refers to a Form 484 Change to Company Details (Ex D1, CB 180) lodged with ASIC on 28 June 2016 which notified a transfer of Joseph’s share in the Company to the Deceased. His evidence is that he did not sign, approve or see that document before it was lodged and had not seen a transfer form relating to a change of the share from Joseph to the Deceased. Joseph also contests the accuracy of the Form 484 lodged on that date. I find, on the balance of probabilities, that that transfer was not created or executed, and that meeting did not take place, because the Company then conducted its corporate affairs in a less formal way.

  4. In his affidavit, Nathan refers to a further conversation with the Deceased in 2017 in which the Deceased asked him whether he and Jacqueline wanted the shares and the Company. If that conversation occurred (which is not a matter I need to determine), it would suggest that the Deceased then thought that he was free to deal with the two shares as he wished. It is not necessary to reach a conclusion as to whether such an understanding would have been consistent with the parties’ earlier understanding, given the conclusions that I reach below on other grounds. It is plain enough that the Deceased later recognised that he was not entitled to retain the share previously held by Joseph as his conduct in 2019 made clear.

  5. As I noted above, by his Will dated 11 October 2017, the Deceased gave all his shares in the Company and all his interest in the associated accounting practice to Jacqueline and Nathan in equal shares as joint tenants (Ex P1, CB 35). The reference to “shares” in the Deceased’s Will is equivocal as to whether he held one or more than one share, where the plural could reasonably be used in anticipation of the possibility that further shares might be acquired in the future. I note that Joseph also prepared a Will which left his “shares” in the Company to Peter although it is apparent that he never held more than one share in the Company.

  6. A further directors’ meeting purportedly held on 16 April 2019 (Ex D1, CB 185) recorded a purported transfer of a share in the Company from the Deceased to Peter. In its context, that purported meeting plainly referred to the share that Joseph previously held in the Company. Even if it occurred, it would be a nullity because the Deceased had not then become the registered holder of that share for the reasons noted above. Peter’s evidence is that, on about 16 April 2019, the Deceased told Peter that he had transferred Joseph’s share in the Company to Peter, and, consistent with Peter’s previous advice to Joseph, Peter again told the Deceased that he did not want that share at that time because he did not want it to affect his ability to borrow money. Peter also refers to the meeting of a meeting of the Company’s directors (and Joseph) said to have been held on 16 April 2019 and denies that he attended that meeting or approved a supposed transfer of Peter’s share to him. He points out that the minutes of that meeting record that Joseph was present at the meeting as a director of the Company, although Joseph had ceased being a director of the Company at the beginning of 2016. Joseph also denies being present at the meeting that purportedly took place on 16 April 2019.

  1. A further note made by an employee of the Company on 17 April 2019 recorded that a transfer of the share from the Deceased to Peter should be reversed because “Peter said ‘No’” (Ex P1, CB 112). Peter also refers to an unsigned minutes of meeting of directors of the Company (and Joseph) on 17 April 2019, recording a meeting relating to a transfer of his share in the Company to the Deceased. His evidence is that he also did not attend that meeting or approve that share transfer and that he did not want Joseph’s share in the Company at that time. Joseph also denies being present at the meeting that purportedly took place on 17 April 2019.

  2. I accept that it is likely that a conversation between Peter and the Deceased took place in April 2019 to the effect set out in Peter’s affidavit, where that is consistent with that note, the purported transfer of the share from the Deceased to Peter and its purported retransfer from Peter to the Deceased and that no transfer forms were executed and no meetings of directors were held at which the relevant resolutions were passed, where the Company conducted its corporate affairs in a less formal way. I do not need to determine whether, as Mr Travis who appears for the Defendants submits, it is unlikely that Peter was present at a meeting on 16 April 2019 which approved a share transfer from the Deceased to him without his indicating he did not want to receive the share, then changed his mind, and was then present at a meeting on 17 April 2019 which approved the retransfer of the share from him to the Deceased. I accept it is possible that he could have changed his mind overnight; but that is not to the point where I have found above that the Deceased was not then the registered owner of that share and I also accept Peter’s and Joseph’s evidence that the meetings on 16 and 17 April did not take place.

  3. The Deceased died on 22 October 2021 and a grant of probate of his Will was made on 10 May 2022. The solicitors acting for the Executor sent a letter dated 22 April 2024 (Ex P1, CB 58) to Peter and George, the latter of whom who was then acting as the Company’s solicitor. That letter enclosed a copy of the Deceased’s Will and the grant of probate; observed that the Executor, as trustee of the Deceased’s estate, held two ordinary shares in the Company; and requested that the Company take steps to register one ordinary share into the names of Nathan and Jacqueline. That request assumed that the Deceased held two shares in the Company and was not consistent with the terms of the Will which provided for Nathan and Jacqueline to hold the share(s) in the Company as joint tenants. Further correspondence followed and, on 19 June 2022, the Executor provided an authority to act (Ex P1, CB 70) to the Company at George’s request (Ex P1, CB 67).

  4. As I noted above, on or about 3 July 2024, the Company provided security transfer forms to Jacqueline, and through her to the Executor for execution, which provided for the transfer of one share from the Deceased to Joseph as trustee for Peter and the transfer of a second share from the Deceased to Nathan and Jacqueline as tenants-in-common. The form of those transfers assumed that the Deceased then held two shares in the Company, although it also reflected a claim, arising from the events noted above, that Joseph was entitled to have one share transferred to him on trust for Peter. Jacqueline’s evidence is that, in July 2024, George requested an employee of the Company to amend ASIC’s records to show one of the Deceased’s shares as held by Joseph on trust for Peter and requested that she provide the proposed transfer form to the Executor to transfer one share from the Deceased “to Peter on trust”. The Executor’s evidence is that she was provided a security transfer to sign on 3 July 2024 (likely meaning both transfers) but declined to sign where it provided for the transfer of one share rather than two shares to Jacqueline and Nathan.

  5. By letter dated 9 July 2024 (Ex P1, CB 75), the Executor’s solicitors requested amendments to the security transfer form to change the number of shares transferred to two. By letter dated 18 October 2024 (Ex P1, CB 78), the solicitors then acting for Joseph and George explained Joseph’s and George’s position that, in 2016, Joseph’s share had been transferred to the Deceased to be held “on trust” for Joseph and his family and that the Company’s ASIC records incorrectly recorded that the share was transferred beneficially to the Deceased. (I interpolate that. on that account, any express trust would likely fail since the identity of the beneficiaries of the suggested trust was unclear, but a failure of that trust would likely have the result that the Deceased held the share on resulting trust for Joseph; it is not necessary to decide this question to determine the proceedings). The letter also contended that, on 16 April 2019, the Deceased transferred the share to Peter; Peter requested the Deceased to continue holding the share for Joseph and that share transfer was reversed on 17 April 2019. The letter suggested correction of the ASIC records; the transfer of one share held by the Deceased back to Joseph; and the transfer of the other share to Nathan and Jacquleine in equal shares as joint tenants in accordance with the terms of the Will.

  6. The Executor’s solicitors subsequently gave notice of her intention to commence the proceedings which she then commenced on 27 November 2024. On 6 December 2024, the solicitor acting for the Executor advised the solicitor now acting for the Defendants that (Ex P1, CB 93):

“The transfer form has not been provided [by the Executor] as it does not accord with our client’s instructions, the ASIC register, nor the Will which our client is seeking to execute.”

  1. Also on 6 December 2024, the Company, through Peter, subsequently prepared a share register reflecting the position for which the Defendants contend.

Applicable principles, submissions and determination

  1. I should first refer to the applicable statutory provisions. Division 2 of Part 7.11 of the Act deals with the transfer of securities including a refusal to register transfers, the issue of certificates, certification of transfers and instruments of transfer. The case law has recognised the complexity of these sections: Jun Bom Ku v Dong Soon Song (2007) 63 ACSR 661; [2007] FCA 1189 at [175]ff (“Ku v Song”). Section 1071B deals with instruments of transfer and assumes the existence of a power to transfer shares that arises under a company’s constitution or at general law: Wood v Inglis (2008) 68 ACSR 420 at 428; [2008] NSWSC 1147. That section provides that a company must not register a transfer of securities unless a proper instrument of transfer has been delivered to it, and that will require that the instrument of transfer show the details specified in the regulations; and, if Div 3 of Pt 7.11 applies, that it is a sufficient transfer of the securities under the regulations, and such a transfer must be signed by the transferor and transferee in a traditional form of share transfer: ss 1071B(2)-(4); Ku v Song at [199]; Imperial Chemical Industries Plc v Echo Tasmania Pty Ltd [2007] FCA 1731 at [125]. An instrument of transfer is not a proper instrument of transfer unless it contains the details required in the regulations or if it is not a sufficient transfer of the securities under the regulations: ss 1071B(3)–(4); Ku v Song at [181].

  2. Section 1072F(1) of the Act is a replaceable rule that, it is common ground, applied to the Company and provides that:

“A person transferring shares remains the holder of the shares until the transfer is registered and the name of the person to whom they are being transferred is entered in the register of the members in respect of the shares.”

  1. Section 1072F(2) of the Act, which is also a replaceable rule, provides that the Company’s

“directors are not required to register a transfer of shares in the [C]ompany unless: (a) the transfer and any share certificate have been lodged at the company’s registered office; and ... (c) the directors have been given any further information they reasonably require to establish the right of the person transferring the shares to make the transfer.”

  1. Mr Travis refers to my decision in Re DCA Enterprises Pty Ltd (2023) 166 ACSR 156; [2023] NSWSC 11 at [119] where I observed that:

“The High Court recognised the significance of a shareholder’s interest in his or her shares in Gambotto v WCP Ltd (1995) 182 CLR 432; 127 ALR 417; 16 ACSR 1 and the Court should not readily permit that interest to be expropriated other than in a manner permitted by the [Act]. … the mechanisms for the proper transfer of shares and the proper change of officeholders exist for the protection of the community generally and not only for the benefit of model corporate citizens.”

I also there expressed the view at [122], which I continue to hold, that “there is a public interest in the adoption of a proper process for changes in directors and shareholders and for notifications to ASIC of directors and shareholdings”.

  1. Section 1072G of the Act is also a replaceable rule and allows directors of a proprietary company the discretion to “refuse to register a transfer of shares in the company for any reason.” There is no suggestion that the Company’s directors have exercised such a discretion here.

  2. Mr Kutasi here relies on the position recorded in ASIC’s records concerning the Company. He submits that those records are prima facie evidence of the matters stated in them and state that the Deceased holds two shares beneficially in the Company as at 26 October 2023, a date after the Deceased’s death. I recognize that s 1274B of the Act establishes a prima facie presumption of a matter stated in a document prepared by ASIC from its national database, in the absence of evidence to the contrary. However, the case law indicates that the language “in the absence of evidence to the contrary” in this section requires evidence and not proof, to the contrary and the prima facie position is displaced once evidence to the contrary is led: Barboutis v Kart Centre Pty Ltd (No 2) [2020] WASCA 41 at [43]ff; Embedded Claims Pty Ltd v Litigation Finance (Australia) Pty Ltd [2023] FCAFC 30 at [58]. The prima facie position indicated by ASIC’s records is here displaced where Peter and Joseph have led evidence to the contrary of it, even apart from the fact that I have accepted relevant aspects of that evidence.

  3. Mr Kutasi also relies on the Company’s minutes of meetings of directors, which he contends are prima facie evidence of the resolutions to which they relate, and relies on minutes dated 28 June 2016 recording a resolution to approve the transfer of Joseph’s share in the company to the Deceased; the minutes dated 16 April 2019 recording a resolution to approve the transfer of one of the Deceased’s shares in the Company to Peter; and the minutes dated 17 April 2019, a resolution to approve the transfer of Peter’s share in the company back to the Deceased. I recognises that s 251A(6) of the Act provides that a minute that is recorded and signed as required by that section is evidence of the proceeding, resolution or declaration to which it relates, unless the contrary is proved. That provision reflects the fact that a minute prepared and signed soon after a meeting is likely to be more reliable than one prepared long afterward: Claremont Petroleum NL v Cummings (1992) 110 ALR 239; (1992) 9 ACSR 1; (1992) 10 ACLC 1685; Galladin Pty Ltd v Aimnorth Pty Ltd (in liq) (1993) 11 ACSR 23; (1993) 11 ACLC 838. The question whether the contrary is proved for the purposes of s 251A(6) is then be determined by reference to the whole of the evidence, without giving any special weight to the minute under s 251A(6) which does not create any statutory presumption that the events recorded in the minute took place: Australian Securities and Investments Commission v MacDonald (No 11) (2009) 256 ALR 199; (2009) 71 ACSR 368; [2009] NSWSC 287 at [78]. For completeness, a minute which has not been entered in the minute book in compliance with the section is also not treated as prima facie evidence of any matter stated or recorded in it for the purposes of s 1305 of the Act: Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725 at [19]. This provision does not here assist the Executor, since there is no evidence that the minutes of the purported 2016 meetings complied with the requirements in s 251A that are necessary to the application of s 251(6) of the Act, and that subsection plainly does not apply to the 17 April 2019 minutes, which are unsigned.

  4. Mr Kutasi also distinguishes the decision in Ku v Song and submits that the ASIC records were there insufficient to persuade the Federal Court that a proper instrument of transfer existed, because it became common ground at the hearing that a proper instrument of transfer did not exist and the minutes of meetings of members of the relevant company recorded no changes in shares held by members. He contrasts the position here where, he submits, the minutes of meetings of members “clearly record” an approval of the transfer of the share previously held by Joseph to the Deceased and the ASIC record details the transfer of the share itself. Mr Kutasi also submits that Nordern Holdings Pty Ltd (Trustee) v Martens Investments Pty Ltd (Trustee), in the matter of Amazonia IP Holdings Pty Ltd [2024] FCA 845 is another such case in which a company resolution which was signed by a chairperson after his resignation as a director was insufficient to constitute a proper instrument of transfer. He distinguishes that decision on the basis that the Deceased’s signature (on two of the three relevant minutes) was there made at a time when he was the director of the Company. It seems to me that these decisions identify the applicable principles and are otherwise decisions on their own facts which provide limited assistance here.

  5. Mr Kutasi acknowledges that the Executor cannot lead evidence of, and is not in possession of, a share transfer form in respect of any of the alleged transfers, but submits that either the Company’s minutes of meeting of Directors serve as a proper instrument of transfer; or the company’s minutes of meeting of directors and the ASIC records provide the basis for the Court to draw an inference that a proper instrument of transfer exists, or existed, which the Defendants have failed to disclose, or adduce in their evidence, either as a result of failing to keep a proper record, or deliberately refusing to, in furtherance of their case. He submits that, if the Court finds that either of the above has occurred, then the Defendants failed to register the effective transfer of the share to the Deceased. I do not accept these submissions. The minutes do not serve as a proper instrument of transfer because they are not signed by the transferor, namely Joseph in respect of the first and critical transaction; and their intended function was not to act as an instrument of transfer of shares, but to record the directors’ approval of a transfer that had previously occurred, even apart from the fact that the meeting to which they refer likely did not place and the last of the minutes is not signed. The ASIC records, which gain no further force from the minutes, do not assist where the evidence of Joseph and Peter that I have accepted, at least in relevant parts, is inconsistent with the position that they record. I think it more likely that a transfer never existed than that it was lost, given then informal nature of the relevant arrangements; and there is no basis for the Court to draw the serious inference that the Defendants have concealed existing transfers to advance their case, if that allegation is still maintained by the Executor.

  6. In opening submissions, Mr Kutasi made a further submission as to the circumstances in which a gift inter vivos can transfer an equitable interest in shares. I do not understand a claim on that basis was pressed at the hearing; it would not support the relief sought and, in any event, its evidentiary basis was not established since I have accepted Joseph’s evidence that he plainly did not intend to gift his share in the Company to the Deceased on any unqualified basis.

  7. Mr Kutasi also submitted, and I accept, that no weight should be given to the register of members prepared by the Company or the Defendants after the proceedings were commenced. I accept that submission and have determined the position here by reference to the contemporaneous documents, with their several deficiencies, and the affidavit evidence and cross-examination.

  8. Mr Travis summarises their position as follows, emphasising the question of whether the Deceased acquired the second share which the Executor contends was transferred to Jacqueline and Nathan by his Will, as follows:

“The [D]efendants maintain that [the Deceased] has always been the owner of one share in the Company. Like the [Executor], the [D]efendants cannot locate any instrument of transfer of a second share to the [Deceased]. Moreover, [Joseph], who the Statement of Claim implies transferred the second share to [the Deceased], denies giving away his one-third share in the Company to [the Deceased] or signing an instrument of transfer with respect to his share in the Company. Joseph’s evidence is that he is the owner of his share in the Company’s business and intends to gift it to his son, Peter …

Although the Statement of Claim is silent on essential material facts, two things may be inferred from the pleading:

(a)   the alleged share transfer somehow involved Joseph and [the Deceased]; and

(b)   the alleged share transfer effected a legal transfer of Joseph’s share to [the Deceased].”

The defence is simple: Joseph did not transfer his share to [the Deceased], so [the Deceased] only has a single share to transmit by his Will.”

  1. As I noted above, the Executor here seeks orders under s 1071F of the Act which relevantly provides that, if directors have authority to register a transfer and refuse to do so, the transferee may apply to the court for an order under that section and, if the court is satisfied that the refusal was without just cause, the Court may, inter alia, order that the transfer be registered. The findings which I have reached above have the consequence that I cannot make the orders sought by the Plaintiff, because their premise that the Deceased was the registered owner of a second share in the Company, so as to transfer it to Jacqueline and Nathan, is not established.

  2. I understand it to be common ground that the one share in the Company held by the Deceased should now be recorded as registered to Jacqueline and Nathan jointly, if the Executor now signs the instrument of transfer for that share. I will reserve liberty to apply, within 21 days, if any difficulty arises in that regard.

Orders

  1. For these reasons, I make the following orders:

  1. The proceedings be dismissed.

  2. The Plaintiff pay the Defendants’ costs of the proceedings as agreed or as assessed.

  3. Reserve liberty to apply, within 21 days, as to the matter specified in paragraph 43 of this Judgment.

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Decision last updated: 05 June 2025

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