Li v Ye (No 2)
[2024] NSWSC 1421
•08 November 2024
Supreme Court
New South Wales
Medium Neutral Citation: Li v Ye (No 2) [2024] NSWSC 1421 Hearing dates: On the papers; submissions received 24 October and 5 November 2024 Decision date: 08 November 2024 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Proceedings dismissed, plaintiffs to pay the defendants’ costs
Catchwords: COSTS – plaintiffs’ claims failed save for establishing that certain amounts were owing – such finding of little value as all companies wound up
Cases Cited: Li v Ye [2024] NSWSC 1176
Category: Costs Parties: Xuxu Li (First Plaintiff)
Kevin Ross Waters-Marsh (Second Plaintiff)
Xiaosi Chaney Qian (Third Plaintiff)
Mana Assets Management Pty Ltd (Fourth Plaintiff)
XCQ Holdings Pty Ltd (Fifth Plaintiff)
Phoenix Group Australia Pty Ltd (Sixth Plaintiff)
Feng Ye (First Defendant)
Thomas Gem Stone Pty Ltd in its own right and in its capacity as trustee of the Ye Family Trust (ABN 39 218 802 573) (Second Defendant)
Shield Formply Australia Pty Ltd (Third Defendant)
Shield Resources Pty Ltd (Fourth Defendant)
Shield Holdings Australia Pty Ltd (Fifth Defendant)
Shield Holdings South Australia Pty Ltd (Sixth Defendant)
Shield Hardwood Pty Ltd (Seventh Defendant)
Shield Intermodal Pty Ltd (Eighth Defendant)
Shield Equipment Qld Pty Ltd (Ninth Defendant)
Shield Timber SA Pty Ltd (Tenth Defendant)
Shield Biomass Energy Pty Ltd (Eleventh Defendant)
Shield Equipment Pty Ltd (Twelfth Defendant)
Shield Construction Material Group Pty Ltd (Thirteenth Defendant)
Oz Plantation and Hewer Pty Ltd (Fourteenth Defendant)Representation: Counsel:
Solicitors:
D Edney (Plaintiffs)
A E Maroya (Defendants)
GWH & Associates (Plaintiffs)
Goh Lawyers (Defendants)
File Number(s): 2024/125503
JUDGMENT
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I published my judgment in this matter on 18 September 2024. [1] I shall use the same abbreviations here.
1. Li v Ye [2024] NSWSC 1176.
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I concluded that, for the most part, the oppression alleged by the plaintiffs had not been established and that the oppression alleged by the defendant had been established.
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I concluded that the relevant companies in the Shield Group should be wound up.
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That has now happened.
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I am now dealing with the costs of the proceedings.
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For the plaintiffs, Mr Edney, who did not appear at the hearing, accepted that the plaintiffs:
“… substantially failed on the primary dispute in the proceedings, being their application for relief with respect to alleged oppression, including with respect to the beneficial ownership of the ‘Chinchilla Property’. That being so, the plaintiffs accept that – at least for the most part – they must pay the defendants’ costs”.
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Mr Edney submitted that, nonetheless, the plaintiffs had established what he described as their “Money Claims” albeit in circumstances where, because the Shield Group companies have now been wound up, the precise amount of those Money Claims was not determined.
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Mr Edney continued:
“While the plaintiffs do not suggest the above to change the fact that they failed in the proceedings as a whole, it would not be a just outcome for them to be required to pay costs attributable to them being put to proof [of] the Money Claims, being claims that were in fact owing (at least in large part, even if it was not ultimately necessary for the Court [to] decide the quantum), and which were separate and distinct from the oppression claims upon which the plaintiffs failed. Rather, the Court should make due allowance in its order as to costs for the costs incurred dealing with the said Money Claims, so as to avoid that unjust outcome”.
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Mr Edney accepted that it would not be practicable to make a costs order that “carves out” the Money Claims and that the appropriate course would be for me to order that the plaintiffs pay a percentage of the defendants’ costs. Mr Edney suggested that that percentage be 80%.
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There is some substance in Mr Edney’s submissions.
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Thus, in my judgment, I found:
“I am satisfied that Suzie is owed a considerable sum by one or more members of the Shield Group but am not able to determine that figure.”[2]
2. At [462].
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However, I continued by stating:
“In view of my overall conclusion as to the appropriate manner in which these proceedings should be disposed of [i.e. that the Shield companies should be wound up], I do not propose to consider the matter further.”[3]
3. At [463].
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On the other hand, in relation to Robin I concluded:
“In that uncertain state of affairs, although I am satisfied that one or more of the Shield Group companies is indebted to Robin, I cannot form any view about what the level of that debt might be.”[4]
4. At [470].
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The difficulty that the plaintiffs had in relation to these, and the other claims made in the proceedings, was evident by reason of what I described as being the “wider background” to the proceedings which are summarised as follows:
“All of these claims must be seen against the wider background that:
(1) the relationship between the parties has irretrievably broken down;
(2) the Shield Group is, if not actually insolvent, close to insolvency;
(3) Thomas has, since November 2023, been excluded from any management role in the Shield Group;
(4) none of the companies in the Shield Group has a functional board of directors; and
(5) the affairs of the Shield Group are presently being conducted by the minority shareholders, Suzie and Robin, who have excluded Thomas from any management role, and who seek to have Thomas transfer to them his shares so they can somehow trade out of the Shield Group’s present financial state.”[5]
5. At [20].
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Those factors pointed to the inevitability of the Shield companies being wound up regardless of the merits of the claims made by the parties. This proposal was embraced by the defendants from the outset, subject to the “one exception” to which I referred at [435] and only belatedly embraced by the plaintiffs.
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In these circumstances, I am persuaded that the appropriate order is that the plaintiffs pay the defendants’ costs of the proceedings.
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I make the following further orders to dispose of the proceedings:
The Amended Summons filed 29 May 2024 is dismissed.
The plaintiffs pay the defendants’ costs, as agreed or assessed, on an ordinary basis.
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Endnotes
Decision last updated: 08 November 2024
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