FEDERAL COURT OF AUSTRALIA
Irons v Nev House Pty Limited
[2018] FCA 1010
File number: NSD 918 of 2018 Judge: RARES J Date of judgment: 25 June 2018 Legislation: Competition and Consumer Act 2010 (Cth) Sch 2, Australian Consumer Law s 18
Corporations Act 2001 (Cth)
Federal Court Rules 2011 Div 10.4, rr 10.42, 10.43
Hague Convention (Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters)
Cases cited: BY Winddown Inc v Vautin (2016) 249 FCR 262
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Date of hearing: 25 June 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: No Catchwords Number of paragraphs: 21 Solicitor for the Applicant: Mr B J Miller of Garland Hawthorn Brahe Solicitors ORDERS
NSD 918 of 2018 BETWEEN: GORDON IRONS
Applicant
AND: NEV HOUSE PTY LIMITED (ACN 610 251 968)
First Respondent
NEV HOUSE HOLDING LIMITED (ACN 611 388 679)
Second Respondent
NEV EARTHFUND S.C.A. SICAV-RAIF (and another named in the Schedule)
Third Respondent
JUDGE:
RARES J
DATE OF ORDER:
25 JUNE 2018
THE COURT ORDERS THAT:
1.Pursuant to r 10.43 of the Federal Court Rules 2011, the applicant have leave to serve the originating application and statement of claim on the third respondent Nev Earthfund S.C.A. SICAV-RAIF at its registered office, 6C rue Gabriel Lipmann, L‑5365 Munsbach, Grand Duchy of Luxemburg, pursuant to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)RARES J:
This is an application by Gordon Irons for leave to serve the third respondent, Nev Earthfund S.C.A. Sicav-Raif, in the Grand Duchy of Luxembourg, with his originating application and statement of claim.
Background
On 18 January 2016, the first respondent, Nev House Pty Limited, through its founder and chairman, Neville Hyman, wrote to Mr Irons, offering him employment, which he accepted. The terms included a success fee equal to 5% of any equity capital raised by Nev House within a specified 12-month period.
Mr Irons became a director and shareholder of Nev House, holding one of its four issued shares, the others being held by a company called Surf Management Systems Pty Ltd and two co‑directors of Nev House, Hayden Filer and Kacey Bridge.
On 18 March 2016, Nev House Holdings Limited was incorporated under the Corporations Act 2001 (Cth). It came to have 96,365,898 ordinary shares on issue, together with over 10,000 cumulative preference shares. Mr Hyman is one of Holdings’ directors and its secretary, and both Mr Bridge and Mr Filer are currently its directors.
A meeting of directors of what its minutes described as “Nevhouse – an Australian unlisted public company”…
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- Case
- [2018] FCA 1010
- Decision Date
CaseChat Overview and Summary
The court considered the requirements for authorising service out of the jurisdiction and the principles applicable on such an application. It determined that Mr Irons had established a sufficient prima facie case, based on the letter of 8 April 2016, which appeared to record a resolution for an allotment of shares to him. The court found that the defendants' strident assertions did not outweigh the prima facie case established by Mr Irons.
The court concluded that Mr Irons had satisfied the requirements to authorise service out of the jurisdiction in Luxembourg. It granted leave for Mr Irons to serve Earthfund in Luxembourg, pursuant to the Hague Service Convention. The court's decision was based on the limited material before it and did not form any concluded view as to the actual facts that may appear in a fully-contested hearing.
The court made an order pursuant to r 10.43 of the Federal Court Rules 2011, granting Mr Irons leave to serve the originating application and statement of claim on Earthfund at its registered office in Luxembourg. The order was made in accordance with the Hague Service Convention and the principles applicable to such an application.
Orders
Orders of the court
1. Pursuant to r 10.43 of the Federal Court Rules 2011, the applicant have leave to serve the originating application and statement of claim on the third respondent Nev Earthfund S.C.A. SICAV-RAIF at its registered office, 6C rue Gabriel Lipmann, L‑5365 Munsbach, Grand Duchy of Luxemburg, pursuant to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The letter went on to make a number of dismissive statements as to the merits of Mr Irons’ claims of there being a resolution to allot him shares. The solicitors enclosed a copy of the 8 April 2016 minutes, noting that at no point in those minutes was there a record confirming his entitlement or approving unanimously an allotment to him of 9.7% of the issued shares in Holdings. The letter asserted that the minutes “clearly state that there was a decision reached only in principal [sic] to increase the total share pool of Holdings to 12 million shares however, such decision was subject to further modelling” which was then later to be undertaken. The letter asserted that Mr Irons was entitled to one share alone in Holdings and that that holding arose “solely as a result of you being noted as director and shareholder of Holdings when it was first incorporated on 18 March 2016 along with three other directors and shareholders”. The letter recorded that Mr Irons had been removed as a director of Holdings on 3 October 2016, following the termination of his employment by Nev House.Consideration Obviously, on an application such as this, any statement that a court must make about “facts” is necessarily based on the limited material before it. I have not formed any concluded view as to what may be the actual facts that will appear if a fully-contested hearing with admissible evidence occurs. The requirements to authorise service out of the jurisdiction and in Luxembourg are set out in Div 10.4 of the Federal Court Rules 2011, and in particular in r 10.43(4). That requires that Mr Irons satisfy me that the Court has jurisdiction in the proceeding, it is of a kind mentioned in r 10.42 and he has a prima facie case for all or any of the relief claimed in the proceeding. The principles applicable on an application to serve a person out of the jurisdiction under r 10.43 are those that Finn, Weinberg and Rares JJ stated in Ho v Akai Pty Ltd (In Liq) (2006) 247 FCR 205 at 208 [10] and 215-216 [45]-[47]. Relevantly, Mr Irons seeks relief based on the obligation of Holdings and or Mr Hyman to issue, or cause to be issued, to Mr Irons (or his nominee) what are now 9,315,866 shares in Holdings. Mr Irons seeks an order that Holdings and Earthfund take all steps necessary to convert those shares, when issued, in accordance with the explanatory cover page and the draft deed to which I have referred, or, alternatively, damages against Nev House and Mr Hyman for breach of contract and or under the Australian Consumer Law, and against Holdings for inducing a breach of that contract to allot the shares, by its failure to do so. It appears from the statement of claim, but there is no evidence of this, that in about January 2017, Holdings increased the number of its ordinary shares from 12 million to the current issued figure of a little over 96 million shares. Despite the strident assertions of the solicitors acting for Nev House and Holdings, in my opinion, in the circumstances, Mr Irons has established a sufficient prima facie case, based on Mr Hyman’s letter of 8 April 2016. That letter appears, prima facie to record a resolution by the directors for an allotment of 9.7% of its issued shares, or promise to allot those shares, by Holdings, to Mr Irons based on a proposed issue of, at that time, 12 million shares, in consideration of his being, and agreeing to continue as, the chief executive officer and managing director of Nev House, which was Holdings’ subsidiary.