McShelly Pty Ltd v VHS Holding Company Pty Ltd

Link copied
Case Copied 53 min read

SUPREME COURT OF QUEENSLAND

CITATION:

McShelly Pty Ltd & anor v VHS Holding Company Pty Ltd & ors [2025] QSC 159
PARTIES:

MCSHELLY PTY LTD ACN 639 163 483 AS TRUSTEE FOR THE MCSINGH FAMILY TRUST

(first plaintiff)

HARSHARAN SINGH

(second plaintiff)

v
VHS HOLDING COMPANY PTY LTD ACN 671 098 758

(first defendant)

VHS DOCTORS PTY LTD ACN 650 760 820 AS TRUSTEE FOR THE 3 WISE MONKEYS FIXED UNIT TRUST

(second defendant)

ANDREW JOHN CRONIN

(third defendant)

STEVEN JOHN SMITH

(fourth defendant)

AUSTRALIAN VETERANS CORPORATION PTY LTD ACN 676 624 258

(fifth defendant)

MELANIE JAYDE CRONIN (NEE FYFE)

(sixth defendant)

OXYGEN THIEF ENTERPRISES PTY LTD ACN 670 346 040

(seventh defendant)

AMANDA JANE SMITH

(eighth defendant)

PHANTOMEDICAL PTY LTD ACN 076 731 523 AS TRUSTEE FOR THE TARDIS DISCRETIONARY TRUST

(ninth defendant)

AMCC PROPERTY PTY LTD ACN 650 688 574 AS TRUSTEE FOR THE AMC PROPERTY TRUST

(tenth defendant)

FILE NO:

13161 of 2024

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

11 July 2025

DELIVERED AT:

Brisbane

HEARING DATE:

22 April 2025; further written submissions filed by second defendant on 3 June 2025; reply written submissions filed by plaintiffs on 9 June 2025.

JUDGE:

Muir J

ORDERS:

1.   In relation to the second defendants’ application filed 21 March 2025:

a.   paragraphs [1] and [3] are dismissed;

b.   the second defendant pay the plaintiffs’ costs of the application to be agreed or assessed.

2.   In relation to the balance of the third to tenth defendants’ application filed 24 March 2025:

a.   paragraph [111(b)] and the references to Ms Cronin and Ms Smith in paragraph [111(d)] of the second amended statement of claim are struck out, with leave to re-plead;

b.   the plaintiffs’ pay the third to tenth defendants’ costs of the application to be agreed or assessed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – where the second plaintiff, third defendant and fourth defendant, along with their corporate and family trust vehicles, established and operated a medical practice from premises at Ipswich – where the running of the Practice at the Premises was a commercial business venture – where the second defendant is the trustee of a property trust and a business trust through which the Practice and Premises were operated – where the plaintiffs allege, among other things, unfair or oppressive exclusion of the second plaintiff from the Practice and the Premises by the third and fourth defendants – where one of the alternative forms of relief sought is an order for the appointment of a receiver of all of the second defendant’s property held in its capacity as trustee – where another alternative form of relief sought is an order winding up the second defendant – where the second defendant has applied for partial summary judgment on the basis that the plaintiffs have no real prospect of success –…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read McShelly Pty Ltd v VHS Holding Company Pty Ltd and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2025] QSC 159
Decision Date

CaseChat Overview and Summary

McShelly Pty Ltd v VHS Holding Company Pty Ltd involved a dispute between several parties connected to a medical practice. The plaintiffs sought various forms of relief, including damages, injunctions, and orders for the appointment of a receiver or winding up of a trust. The second defendant, VHS Holding Company Pty Ltd, applied for summary judgment and the striking out of certain paragraphs of the plaintiffs' claims. The third to tenth defendants also sought to strike out parts of the plaintiffs' claims, arguing they disclosed no reasonable cause of action.

The court had to decide whether the plaintiffs had a real prospect of success in relation to the claims for the appointment of a receiver or for winding up the second defendant. It also had to determine if certain paragraphs of the plaintiffs' claims disclosed no reasonable cause of action or defence, and if leave to replead should be granted. The court considered the applicability of section 233 of the Corporations Act in the context of oppression proceedings and property held on trust by a corporate trustee.

The court found that it was at least arguable that section 233 of the Corporations Act could confer a power to make orders over property held on trust by a corporate trustee in the context of oppression proceedings. The court also determined that certain paragraphs of the plaintiffs' claims disclosed no reasonable cause of action and should be struck out, but granted leave to replead in relation to some of those paragraphs. The court dismissed the balance of the second defendant's application and ordered the second defendant to pay the plaintiffs' costs. It also ordered the plaintiffs to pay the costs of the third to tenth defendants' application.

In summary, the court rejected the second defendant's application for summary judgment, struck out certain paragraphs of the plaintiffs' claims, and granted leave to replead in relation to some of those paragraphs. The court also ordered the parties to pay costs in relation to the applications.

Orders

Orders of the court

1. In relation to the second defendants’ application filed 21 March 2025:

a. paragraphs [1] and [3] are dismissed;

b. the second defendant pay the plaintiffs’ costs of the application to be agreed or assessed.

2. In relation to the balance of the third to tenth defendants’ application filed 24 March 2025:

a. paragraph [111(b)] and the references to Ms Cronin and Ms Smith in paragraph [111(d)] of the second amended statement of claim are struck out, with leave to re-plead;

b. the plaintiffs’ pay the third to tenth defendants’ costs of the application to be agreed or assessed.

Background

Background to the litigation

Before applying these principles, it is necessary to understand the facts as they emerge through the prism of the plaintiffs’ pleaded case, and as generally agreed for the purpose of these applications.[16] [16]I acknowledge that some of these facts may be contentious moving forward.Relevant facts Dr Singh, Dr Cronin and Dr Smith are qualified medical doctors who, in mid-2021, decided to go into business together for the purpose of providing medical services to defence force veterans. From late 2022 to mid-2023, the three doctors and their respective family trust companies (the first plaintiff and the ninth and tenth defendants) reduced the terms on which they agreed to conduct and profit from the operation of the Practice at the Premises into a written Heads of Agreement which was never signed. The initial structure of the business venture was that the second defendant, VHS Doctors Pty Ltd as trustee of the 3 Wise Monkeys Fixed Unit Trust (“the Property Trust”) acquired the Premises for the purpose of leasing it to a tenant controlled by Dr Singh, Dr Cronin and Dr Smith, to carry out the Practice. The second defendant was registered as a company on 4 June 2021 and Dr Singh, Dr Smith and Dr Cronin were each appointed as a director. All three doctors held (and continue to hold) equal shares in the company. The unit holders of the Property Trust are (and remain) the respective corporate vehicles of each of the three doctors: that is the first plaintiff, McShelly Pty Ltd as the corporate vehicle of Dr Singh; the ninth defendant, Phantomedical Pty Ltd as trustee of the Tardis Discretionary Trust as the corporate vehicle of Dr Smith; and the tenth defendant, AMCC Property Pty Ltd as trustee for the AMC Property Trust as the corporate vehicle of Dr Cronin.[17][17]The first plaintiff, McShelly Pty Ltd, has as its two directors Dr Singh and Ms Rebecca McLeod Singh. The first plaintiff is the trustee for the McSingh Family Trust and in this capacity, is the holder of one-third of the units in the Property Trust. The second defendant does not hold any assets or conduct any business in its own right, but as well as being the trustee of the Property Trust it is the trustee of two further trusts: the Veterans Health Solutions Fixed Unit Trust (“the Business Trust”), and the Bad World Discretionary Trust (“the Discretionary Trust”). The Business Trust is a unit trust and 100% of its units were initially held by the Discretionary Trust. The named beneficiaries of the Discretionary Trust are Dr Singh, Dr Smith and Dr Cronin and each of their wives, together with each of their respective corporate vehicles (being the first plaintiff and the ninth and tenth defendants). Dr Singh’s wife, Ms Singh, is not a party to the proceedings but she is a director of the first plaintiff. Dr Cronin’s wife, Ms Cronin, is the sixth defendant. Dr Smith’s wife, Ms Smith, is the eighth defendant. In November 2021, VHS Doctors as trustee of the Business Trust (as lessee) entered into a long-term lease of the Premises with the second defendant, VHS Doctors as trustee of the Property Trust (as lessor).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

By their amended claim, the plaintiffs seek the following relief against the defendants:A. Damages for breach of the Heads of Agreement against the third, fourth, seventh (or alternatively to the seventh, the tenth) and ninth defendants in the amount of $1,118,604.80;B. Further or alternatively to (A), orders pursuant to s 1324 of the Corporations Act:(a)restraining the third, fourth, fifth, sixth, seventh, eighth, and ninth defendants from contravening ss 181-3 of the Corporations Act; and(b)requiring the third, fourth, fifth, sixth, seventh, eighth, and ninth defendants to do all things necessary to:(i) reinstate the first plaintiff as a medical practitioner entitled to earn medical practitioner fees within the Practice; and(ii) grant the second plaintiff a one-third interest in the fifth defendant; C. In addition to, or in substitution for, the relief sought in (B), an order that the third, fourth, fifth, sixth, seventh, eighth, and ninth defendants pay damages to the first and second plaintiff under s 1324(10) of the Corporations Act;D. Further or alternatively to the relief sought in (A)-(C), as against the third, fourth and fifth defendants for breach of fiduciary duty:(a)an order for payment of equitable compensation to the first and second plaintiffs;(b)an order granting an equitable charge in favour of the first and second plaintiffs against the shares received by the fifth defendant from the first defendant to secure payment of equitable compensation; and(c)alternatively, and at the plaintiffs’ election, an account of profits against the third, fourth and fifth defendants;E. Further or alternatively to the relief sought in (A)-(D), an order under ss 233(1)(d) and 233(1)(j) of the Corporations Act:(a)that the third, fourth, seventh, and ninth defendants purchase all shares held by the first plaintiff in the first defendant at a price to be determined by the court; and(b)that the first defendant do all things necessary to ensure that the share register reflects the transfer of shares contemplated by order E(a);(C) that the ninth and tenth defendants purchase the first plaintiff’s units in the Property Trust and the third and fourth defendant purchase all shares held by the second plaintiff in the second defendant, at a price to be determined by the court; and(d)that the second defendant do all things necessary to ensure that the register of unit holders and share register reflects the transfer of the units and the transfer of shares, respectively, contemplated by order E(c);F.Alternatively to the relief sought in (E)(c)-(d), an order under s 233(l)(h) and (j) of the Corporations Act appointing a receiver or a receiver and manager of all of the second defendant’s property held in its capacity as trustee of the Property Trust and a further order that the receiver or receiver and manager sell the property (including the Premises) and distribute the net proceeds first to the first plaintiff in the amount determined by the Court, with the balance to be distributed on a pro-rata basis to the ninth and tenth defendant in accordance with their respective unit holdings in the Property Trust;G. Alternatively to the orders sought in (E)(c)-(d) and (F), an order under s 233(1)(a) of the Corporations Act or, further and alternatively, s 461(1)(k) of the Corporations Act, winding up the second defendant.Second defendant’s application for summary judgment

Ratio Decidendi

Legal Principle Established

Counsel for the second defendant submitted that this Court should not follow Re Dawning to the extent it is relied upon by the plaintiffs as authority for the proposition that s 233(1)(h) of the Corporations Act confers a power to make orders over property held on trust by a corporate trustee. For the purposes of this summary judgment application, it is unnecessary to resolve the competing views about this because for the reasons discussed below, I am satisfied that it is at least arguable that such a power exists in the context of oppression proceedings under ss 232 and 233 of the Corporations Act. The interaction between ss 232 and 233 of the Corporations Act and trust property Chapter 2F of the Corporations Act is titled “Members’ rights and remedies”, with the provisions in Part 2F.1 providing for “Oppressive conduct of affairs”. Section 233 (in Part 2F.1) of the Corporations Act allows a court to make any order under that section that it considers appropriate in relation to the company. Relevantly, this includes “appointing a receiver or a receiver and manager of any or all of the company’s property” under s 233(1)(h). The discretion to make orders under s 233 is an extremely wide one, although it is only enlivened when one or more of the grounds in s 232 of the Corporations Act are present. Those grounds are as follows:“232 Grounds for Court orderThe Court may make an order under section 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 As the summary judgment application was argued before me, the divergence in views about the nature and extent of the relief available under s 233 was ignited by the statement in the second defendant’s outline of submissions that “[t]here is an ongoing debate as to the extent to which relief under s 233 of the Corporations Act is available where the company in question is acting as the trustee of a trust.”[36] Counsel for the plaintiffs maintained “there is no debate”.[37] [36]Outline of submissions of second defendant, filed 22 April 2025 at [10].[37]Transcript of hearing p 1-16, line 33. After I reserved my decision, the second defendant requested and was granted the opportunity to provide written submissions to the Court further addressing this issue following the decision of the New South Wales Court of Appeal in David & Ros Carr Holdings Pty Ltd v Ritossa [2025] NSWCA 108, which was delivered on 23 May 2025.[38] [38]The second defendant’s further submissions were filed on 3 June 2025, and the plaintiffs’ submissions in reply were filed on 9 June 2025. It is fair to say that some of the earlier decisions took a narrow view between the property and affairs of a trust and company property.[39] But the recent decision of David & Ros Carr Holdings makes it “tolerably clear” that “a company’s affair” under s 232(a) of the Corporations Act includes the affairs of a trustee company in executing a trust, and its business in conducting the operation of the trust and administering the trust.[40] [39]See, eg, Kizquari Pty Ltd v Prestoo Pty Ltd (1993) 10 ACSR 606 at 612 (Young J); Trust Company LtdvNoosa Venture 1 Pty Ltd (2010) 80 ACSR 485 at 514-6 [101]-[105] (Windeyer AJ).[40]David & Ros Carr Holdings Pty Ltd vRitossa [2025] NSWCA 108 at [106]-[108] (Leeming JA, Stern JA and Griffiths AJA agreeing), citing Vigliaroni v CPS Investment Holdings Pty Ltd (2009) 74 ACSR 282 at 304-3 [63] (Davies J), approved in Tzavaras v Tzavaras & Sons Pty Ltd [2023] NSWCA 168 at [62] (Gleeson and Adamson JJA, Griffiths AJA), see also Melrob Investments Pty Ltd v Blong Ume Nominees Pty Ltd (2022) 141 SASR 1 at 24-31 [98]-[127] (Bleby JA, Lovell and David JJA agreeing).