Patel v Gedela

[2025] NSWSC 139

Supreme Court

New South Wales

Medium Neutral Citation:	Patel v Gedela [2025] NSWSC 139
Hearing dates:	28 February 2025
Date of orders:	28 February 2025
Decision date:	28 February 2025
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Pursuant to section 293 of the Corporations Act 2001 (Cth), the second defendant shall prepare financial reports (which are to be audited) and directors reports for the financial years ended 30 June 2022, 30 June 2023 and 30 June 2024.
Catchwords:	CORPORATIONS – accounts – financial reports – where oppression suit settled on basis that first defendant purchase plaintiff’s shares in the second defendant for value – where plaintiff makes application under s 293 of Corporations Act 2001 (Cth) that second defendant prepare financial and directors’ reports
Legislation Cited:	Corporations Act 2001 (Cth)
Category:	Procedural rulings
Parties:	Ashokkumar Jayantilal Patel (Plaintiff/Applicant) Rajesh Gedela (First Defendant/Respondent) Master Steel Frames Pty Limited (Second Defendant/Respondent)
Representation:	Counsel: M Bennett (Plaintiff/Applicant) Solicitors: Uther Webster & Evans Pty Ltd (Plaintiff/Applicant) Simon Diab & Associates (Defendants/Respondents)
File Number(s):	2023/00322428

EX TEMPORE JUDGMENT (REVISED)

1. The plaintiff and first defendant are the sole shareholders in the second defendant.

2. The plaintiff commenced these proceedings in 2023 alleging that the first defendant had been conducting the affairs of the second defendant oppressively to the plaintiff.

3. The proceedings were settled on 21 June 2024 when orders were made that the first defendant purchase the plaintiff’s shares.

4. Those orders provide the mechanism whereby an independent joint expert will conduct a valuation of the shares.

5. Some material has been supplied to the valuer, but a valuation has not yet been effected.

6. The only accounts of the second defendant that have been thus far made available to the plaintiff are the unaudited accounts for FY23. The plaintiff has in correspondence expressed concerns as to the accuracy and veracity of those accounts.

7. Now, by amended Notice of Motion dated 18 February 2025, the plaintiff seeks an order under s 293 of the Corporations Act 2001 (Cth) that the first defendant prepare audited financial reports and director's reports for FY22, FY23 and FY24.

8. Section 293 of the Corporations Act provides relevantly:

“(1) Shareholders with at least 5% of the votes in a small proprietary company may give the company a direction to:

(a) prepare a financial report and directors’ report for a financial year; and

(b) send them to all shareholders.

(2) The direction must be:

(a) signed by the shareholders giving the direction; and

(b) made no later than 12 months after the end of the financial year concerned.

(3) The direction may specify all or any of the following:

(a) that the financial report does not have to comply with some or all of the accounting standards;

(b) that a directors’ report or a part of that report need not be prepared;

(c) that the financial report is to be audited.”

9. Mr Bennett, who appears for the plaintiff, accepts that any order under s 293 should be directed to the second defendant rather than the first defendant.

10. Ms Israel, who appears today for the defendants, did not suggest that the factual matters enlivening the plaintiff’s entitlement to give a direction under s 293 have not been established.

11. Ms Israel submitted that, nonetheless, I should not make an order under s 293 on two bases.

12. First, Ms Israel submitted that the plaintiff should no longer be seen as being entitled to an order under s 293 because the oppression suit has been settled. Second, Ms Israel submitted that as the plaintiff has not made any application to this or another court that would render the documents relevant that it also provides a basis to decline the relief sought.

13. I cannot see how either of those matters could affect the entitlement that s 293 gives the plaintiff, as a shareholder in the second defendant, to make the application now made. Typically, such an application would be made in the Corporations List, but I see no reason why I should not deal with it in these proceedings.

14. I propose to make the order sought in the Notice of Motion save that the words "the first defendant" will be "the second defendant".

15. I direct that the first defendant provide those audited reports as soon as is reasonably practicable and give the parties liberty to apply if there is some dispute about the time within which those documents are produced.

16. The plaintiff also seeks an order that the defendants provide to the plaintiff the documents set out in Annexure A of the Notice of Motion, which include financial statements, project information, information concerning accounts receivable, an asset list, information relevant to wages paid by the second defendant, and meeting records.

17. I am unable to see what right the plaintiff has in these proceedings to seek an order that those documents be produced. Mr Bennett submitted, albeit somewhat faintly, that order seven made on 21 June 2024 might provide a basis upon which to make those orders. That order obliges the parties to provide the valuer, by a specified date, with such information reasonably required by the valuer to conduct the valuation.

18. There is no evidence that the valuer has requested the documents sought by the plaintiff; or indeed any other documents. Accordingly, I am not prepared to make that order.

19. I order that the defendants pay the plaintiff's costs of the Notice of Motion of 18 February 2025. 

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Decision last updated: 04 March 2025