Morrison v Woodthorpe - [2022] WASC 179

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   MORRISON -v- WOODTHORPE [2022] WASC 179
CORAM:   MASTER SANDERSON
HEARD:   16 MAY 2022
DELIVERED          :   20 MAY 2022
PUBLISHED           :   20 MAY 2022
FILE NO/S:   COR 64 of 2022
BETWEEN:   ALLAN ROY MORRISON
First Plaintiff
ADAMUS RESOURCES PTY LIMITED
Second Plaintiff
AND
KEVIN MARK WOODTHORPE
First Defendant
PETER BASIL WALLACE MICHAEL
Second Defendant
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third Defendant

Catchwords:

Corporation law - Application to stay proceedings pending determination of overseas proceedings - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	CK Pearce
Second Plaintiff	:	CK Pearce
First Defendant	:	L Christensen
Second Defendant	:	L Christensen
Third Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Blackwall Legal LLP
Second Plaintiff	:	Blackwall Legal LLP
First Defendant	:	CX Law
Second Defendant	:	CX Law
Third Defendant	:	No appearance

Cases referred to in decision:

Nil

MASTER SANDERSON:

By originating process filed 5 April 2022, the plaintiffs sought relevantly the following order:
1.An order under s 1322(4)(b) of the Act directing the rectification of ASICs register such that:
(a)the First Plaintiff be recorded as the sole director and secretary of the Second Plaintiff;
(b)the registered office of the Second Plaintiff be recorded as ALLAN MORRISON 21A BRISTOL AVENUE BICTON WA 6157;
(c)any references to the First Defendant and Second Defendant being directors of the Second Plaintiff be removed;
(d) any references to the First Defendant being a secretary of the Second Plaintiff be removed; and
(e)any reference to the Second Plaintiffs registered office being at LEVEL 1 115 CAMBRIDGE STREET WEST LEEDERVILLE WA 6007 be removed.
2.An order under s 1322(4)(b) of the Act directing ASIC to:
(a)cancel the corporate key issued to the Company;
(b)issue a new corporate key in respect of the Company to the First Plaintiff; and
(c)restrain from registering any documents lodged in respect of the Company until orders 1 and 2 of this originating process be complied with.
The plaintiffs' application is supported by three affidavits - one by the first plaintiff sworn 4 April 2022, one by Paul List sworn 5 April 2022 and the third by Jean Dyer sworn 21 April 2022. Properly considered, the plaintiffs seek orders directing ASIC to rectify the register of companies in respect of the second plaintiff such that the Unauthorised Form 484 (as that term is defined in the Morrison affidavit) be effectively withdrawn. The Unauthorised Form 484 purports to record the following changes which the plaintiffs assert are incorrect:
(a)the removal of the first plaintiff as director and secretary of Adamus;
(b)the appointments of the first defendant and second defendant as directors of Adamus;
(c)the appointment of the first defendant as secretary of Adamus; and
(d)a change in Adamus' registered address.
The plaintiffs also seek to cancel and reissue Adamus' corporate key.
There is some common ground between the parties. It is not in dispute that all the shares of Adamus are owned by Nguvu Holdings Ltd (Nguvu) (formerly BCM Investments Ltd). Nguvu is a company incorporated in Saint Kitts and Nevis in the Caribbean. Proceedings have been commenced in the Eastern Caribbean Supreme Court Federation of Saint Christopher and Nevis regarding, amongst other things, the shareholding in Nguvu and resolutions purportedly passed to change the directorship of Nguvu (Nevis proceedings). These Nevis proceedings were first commenced in December 2021. It is estimated the proceedings will reach trial some time in December 2023 with a final disposition some three months thereafter. The parties accept the right to appeal will be available to whoever is unsuccessful in the proceedings and that may delay the final resolution of the dispute.
In the Nevis proceedings there is an injunction in place preventing any party from, amongst other things, altering the current management structure and directorship of Nguvu until the full inter partes hearing. On 5 March 2022, the first and second defendants made a stay application. The orders they seek relevantly are as follows:
1.The Originating Process lodged by the plaintiffs on 5 April 2022 be stayed until the discontinuance, stay or determination of the proceedings, instituted by Paul List and Rowntry Trading Ltd as the claimants against Angela List and Nguvu Holdings Ltd (formerly BCM Investments Ltd) as some of the defendants, in the Eastern Caribbean Supreme Court Federation of Saint Christopher and Nevis Claim No: NEVHCV2021/0194 (the Nevis Proceedings).
The issue then between the parties on this application is straight forward - should the proceedings issued in this court be stayed pending final resolution of the Nevis proceedings? The parties were in agreement as to the applicable legal principles but it is worth outlining the legal framework within which this matter is to be decided. (What follows is taken directly from the plaintiffs' written submissions. While it differs slightly from the written submissions filed on behalf of the defendants, counsel for the defendants did not in his oral submissions point to any differences between the parties. No difference is evident on the face of the defendants' submissions. Therefore, with respect, I will adopt the submissions filed on behalf of the plaintiffs.)
8.Factors relevant to the exercise of the Court’s discretion to stay proceedings or decline jurisdiction on the ground of forum non conveniens include, but are not limited to, the following:
(a)a consideration of the true nature and full extent of the issues involved in proceedings in the local court and in the foreign court;
(b)whether, in the light of that consideration, the foreign court has jurisdiction to deal with the same subject matter as is before the local court;
(c)the degree of connection which both proceedings share with the law of the foreign court and the law of the local court;
(d)where the relevant acts or omissions occurred;
(e)where the parties reside and carry on business;
(f)whether local professional or other standards of care have a bearing on the legal quality of the relevant acts or transactions or the liability of the parties;
(g)where and how the damage was suffered;
(h)where the relevant evidence in the action is to be found;
(i)whether the application to the local court for a stay or dismissal has been made with reasonable promptness;
(j)the stage which proceedings in the foreign court have reached in comparison with the stage of proceedings in the local court;
(k)the order in which the two sets of proceedings were instituted and the costs which have been incurred in each;
(l)whether each court recognises the orders and decrees of the other;
(m)which court can provide more effectively for the complete resolution of the whole of the controversy between the parties;
(n)that a party properly invoking the jurisdiction of the local court has a prima facie right to insist upon the exercise of that jurisdiction, so long as that prima facie right is not given undue emphasis;
(o)that considerations of comity and restraint should be taken into account where a defendant carries on business in a foreign country and the jurisdiction of the courts of that country would be recognised under local conflict rules;
(p)the undesirability of allowing two independent actions involving the same question of liability to proceed contemporaneously in the courts of different countries; and
(q)whether the dominant purpose of a party in commencing proceedings in one jurisdiction or another is to prevent another party from pursuing remedies available in the courts of another country having jurisdiction.
The relevant facts may be summarised as follows. Paul List and Angela List are a married but estranged couple. The second plaintiff is a company registered in Australia and a wholly owned subsidiary of Nguvu. On 3 November 2021, Paul List commenced an application for interim relief in the Eastern Caribbean Supreme Court. An interim injunction was obtained effectively restraining Angela List from managing Nguvu.
In the injunction proceedings, Paul List alleged he and Angela were the only two directors of Nguvu. Paul further alleged he is the sole director and owner of Rowntry Trading Ltd (Rowntry). Rowntry became defaunct as of February 2005 and was struck off the Register of International and Foreign Companies in Samoa. Angela List is the sole shareholder of Notre Dame Investment Ltd (Notre Dame). Paul alleged Angela, by fraudulent means, arranged to change the name of BCM Investments Ltd to Nguvu and to transfer Nguvu shares from Rowntry to Notre Dame and for the forfeiture of Nguvu's shares held by Rowntry to the effect that Notre Dame became the sole shareholder of Nguvu. He further alleged Angela falsely presented herself as the managing director of Nguvu.
Subsequent to the issue of the interlocutory injunction (which was granted ex parte), Angela filed an affidavit dated 6 December 2021. In that affidavit, Angela denies any fraudulent activity and she says Paul did not, prior to the issue of proceedings, participate or show any interest in the affairs of Nguvu. She says further, since the interim injunction was obtained, Paul had approached third parties who had dealings with Nguvu using the injunction as proof of his control of the ownership of Nguvu.
On 20 December 2021, there was an inter partes hearing in relation to the injunction. The injunction was varied so that:
(a)Angela List was prohibited from selling, transferring, encumbering or in any way dealing with shares of Nguvu;
(b)Angela List and Nguvu were prohibited from taking any steps to alter the current management structure and directorship of Nguvu; and
(c)Nguvu Holdings was prohibited from selling, transferring, disposing, encumbering or in any other way dealing with shares in Nguvu.
The parties have now joined issue and a statement of claim has been filed and amended and a defence has been lodged and amended. The pleadings appear as attachments to an affidavit of Fei Fei Xue sworn 5 May 2022 and filed in support of the stay application. The pleadings make interesting reading, not least of all because the style of pleading in the Caribbean is clearly somewhat more colourful than the rather dry style found in Australian jurisdictions. It is not necessary to go through the pleadings. It is enough if I say there is allegation and counter-allegation and the issues I have referred to briefly above are fleshed out rather more fully.
So far as these proceedings are concerned, the first plaintiff was the sole director and secretary of the second plaintiff from 29 December 2017 to 24 December 2021. On 24 December 2021, Nguvu, by a purported shareholder's resolution signed by Angela:
(a)removed the first plaintiff as sole director and secretary of the second plaintiff;
(b)appointed the first and second defendants as directors of the second plaintiff; and
(c)the first defendant was appointed as company secretary of the second plaintiff.
On 6 January 2022, these changes were registered with ASIC together with a change of registered office addressed to the second plaintiff.
The defendant says there are a number of reasons why the proceedings in this jurisdiction ought be stayed. First, they say there are a wide range of issues relating to ownership, management and control of Nguvu which are in dispute in the Nevis proceedings. This includes, but is not limited to, who are the directors and shareholders of Nguvu, is Angela the managing director of Nguvu, is Angela's conduct in the management of Nguvu a breach of her duties and/or fraud? The Nevis proceedings were commenced first and have proceeded to the point where pleadings are closed and in determining the validity of the shareholder's resolution, it is the laws of Nevis not Australia that are applicable.
On behalf of the plaintiffs, it is submitted the Nevis proceedings deal primarily with the ultimate control and shareholding of Nguvu and with certain actions taken by Angela with respect to the directorship and shareholding of Nguvu. It is further submitted nothing in the outcome of the Nevis proceedings or any other remedies that may or may not be granted in the Nevis proceedings will effect the question in these proceedings - that is to say whether the relevant purported resolutions were valid at the time of their purported making. The plaintiffs point to the decision of the Nevis court and say the court has already determined that Paul is a director of Nguvu.
The plaintiffs say the issue in these proceedings are different to those in the Nevis proceedings. They say there is no overlap which would result in an Australian court making findings of fact inconsistent with the Nevis court. They say the issues in this case relate to an Australian company and the directorship of that company. The issues in the present proceedings cannot therefore be resolved in Nevis nor can the remedy be given in a Nevis court.
In my view, it is appropriate that the issues raised in this application be heard and determined in this court and that hearing take place as soon as possible. What is to be determined in this court is particularly within the province of Australian courts. It is the validity of the appointment of directors to an Australian company. I accept there is significant overlap between the Nevis proceedings and this action. But it is important control of the Australian company be determined by an Australian court and it is inappropriate to leave the matter hanging for a period of two years or perhaps longer. Accordingly, I am not satisfied a stay ought be granted and I would dismiss the defendants' application.
Subject to hearing from the parties, I would propose to make orders dismissing the defendants' interlocutory process. My preliminary view is that costs of the application ought be costs in the cause. Any party who wishes to make submissions in relation to costs should do so within seven days of the publication of these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AH
Associate to Master Sanderson
20 MAY 2022