Li v Ye

Case [2024] NSWSC 1176 18 September 2024

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Supreme Court

New South Wales

Medium Neutral Citation: Li v Ye [2024] NSWSC 1176
Hearing dates: 3, 4, 6, 11, 12, 24 June, 12 August 2024; further written submissions 23, 26 & 27 August 2024
Decision date: 18 September 2024
Jurisdiction: Equity - Commercial List
Before: Stevenson J
Decision:
Oppression alleged by plaintiffs for the most part not established; oppression alleged by defendant established; companies in the Shield Group to be wound up

Catchwords:
CORPORATIONS – members’ rights and remedies – oppression – power of court to order remedy – where group of companies engaged in the timber industry – where irretrievable break down in the relationship between various shareholders and directors of those companies – where competing allegations of oppression – plaintiffs’ allegations for the most part not made out – defendant undoubtedly locked out of management of companies since November 2023
CORPORATIONS – winding up – where the group of companies is in a parlous financial state – where the principal trading company in the group is likely, or is actually, insolvent – where remedy sought by the plaintiffs would enable the group to trade and incur debts where there are reasonable grounds to suspect insolvency – where appropriate course to wind up the companies

Legislation Cited:
Corporations Act 2001 (Cth)
Work Health and Safety Act 2012 (SA)

Cases Cited:
Ananda Marga Pracaraka Samgha Ltd v Tomas (No 6) (2013) 300 ALR 492; [2013] FCA 284
Australian Securities and Investments Commission v Plymin (No 1) (2003) 175 FLR 124; [2003] VSC 123
BAM Property Group Pty Ltd as trustee for the BAM Property Trust v Imoda Group Holdings Pty Ltd [2019] FCA 1192
Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567
Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384; [2011] NSWSC 186
Bideena Pty Ltd as trustee for Bideena Pty Ltd Superannuation (2016) 334 ALR 146; [2016] NSWSC 735
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Campbell v BackOffice Investments Pty Ltd (2008) 66 ACSR 359; [2008] NSWCA 95
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25
Cassegrain v CTK Engineering Pty Ltd [2005] NSWSC 495
Cowling v Mekken [2015] VSC 196
Elliott v Australian Securities and Investments Commission (2004) 10 VR 369; [2004] VSCA 54
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688; [1998] NSWSC 413
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] NSWCA 97
First Strategic Development Corporation Ltd (in liq) v Chan [2014] QSC 60
Food Improvers Pty Ltd v BGR Corporation Pty Ltd (No 4) [2007] FCA 220
French v Smith; French v Quarry Quip Engineering Pty Ltd [2004] VSCA 207
Gerard Cassegrain & Co Pty Ltd v Cassegrain [2011] NSWSC 1156
Helton v Allen (1940) 63 CLR 691; [1940] HCA 20
In the matter of Bias Boating Pty Limited (receivers and manager appointed) (in liquidation) [2018] NSWSC 1977
In the matter of Custom…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Li v Ye

Details

AGLC: Li v Ye [2024] NSWSC 1176
Case: [2024] NSWSC 1176
Decision Date: 18 September 2024

CaseChat Overview and Summary

The plaintiffs, Li, sought relief from the court against the defendant, Ye, alleging oppression in the management of a group of timber industry companies. The plaintiffs argued that their rights as minority shareholders had been unfairly disregarded, while the defendant claimed that the plaintiffs were attempting to take advantage of the companies' financial difficulties to advance their own interests. The case was heard in the Supreme Court of Victoria.

The central legal issues the court had to address were whether the plaintiffs had been oppressed in the management of the companies, and if so, what remedy was appropriate. The plaintiffs alleged that their interests were unfairly disregarded and that they had been excluded from the management and control of the companies. The court also had to consider whether the companies were in a parlous financial state and whether a winding-up order would be appropriate.

The court found that the plaintiffs' allegations of oppression were largely unsubstantiated, but acknowledged that the defendant had been effectively locked out of the management of the companies since November 2023. The court concluded that the companies were in a financially precarious situation, with the principal trading company likely or actually insolvent. Given these circumstances, the court determined that ordering the companies to continue trading and incur further debts, as the plaintiffs sought, would be inappropriate. Instead, the court found that the most suitable course of action was to wind up the companies to protect creditors and prevent further financial harm.

The final orders of the court were to wind up the companies, with directions for the liquidator to investigate the conduct of the directors and shareholders, and to report back on any potential claims for damages or other remedies. The court also ordered that the plaintiffs' application for relief from oppression be dismissed, as the allegations were not substantiated.

Orders