Pearce v Mulhern

Case [2010] FCA 446

FEDERAL COURT OF AUSTRALIA

Pearce v Mulhern [2010] FCA 446

Citation: Pearce v Mulhern [2010] FCA 446
Parties: MARK WILLIAM PEARCE AND ANDREW JOHN HEERS AS TRUSTEES OF THE PROPERTY OF MICHAEL RICHARD MULHERN (A BANKRUPT) v JACQUELINE PATRICIA MULHERN, CELTIC PACIFIC PROPERTIES PTY LTD (ACN 071 232 230), MULHERN CONSTRUCTIONS PTY LTD (ACN 060 410 102), DICEY'S GLADSTONE PTY LTD (ACN 098 084 372), WAK GLADSTONE PTY LTD (ACN 098 226 343) and GLADSTONE UNITED PTY LTD (ACN 098 085 708)
File number: QUD 88 of 2010
Judge: REEVES J
Date of judgment: 6 May 2010
Legislation: Corporations Act 2001 (Cth), ss 168, 169, 176, 178A, 258D
Bankruptcy Act 1966 (Cth), s 121
Federal Court Rules, O 29 r 2
Cases cited: Wood v Inglis [2008] NSWSC 1147
Date of hearing: 29 April 2010
Place: Brisbane
Division: GENERAL DIVISION
Category: NO CATCHWORDS
Number of paragraphs: 52
Counsel for the Applicant: CD Coulsen
Solicitor for the Applicant: LynchMorgan Lawyers
Counsel for the Respondents: There was no appearance.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

QUD 88 of 2010
BETWEEN:

MARK WILLIAM PEARCE AND ANDREW JOHN HEERS AS TRUSTEES OF THE PROPERTY OF MICHAEL RICHARD MULHERN (A BANKRUPT)
Applicants
AND:

JACQUELINE PATRICIA MULHERN
First Respondent

CELTIC PACIFIC PROPERTIES PTY LTD (ACN 071 232 230)
Second Respondent

MULHERN CONSTRUCTIONS PTY LTD (ACN 060 410 102)
Third Respondent

DICEY'S GLADSTONE PTY LTD (ACN 098 084 372)
Fourth Respondent

WAK GLADSTONE PTY LTD (ACN 098 226 343)
Fifth Respondent

GLADSTONE UNITED PTY LTD (ACN 098 085 708)
Sixth Respondent

JUDGE:

REEVES J

DATE OF ORDER:

6 MAY 2010

WHERE MADE:

BRISBANE

THE COURT DECLARES THAT:

1.As at 3 February 2010:

(a)Michael Richard Mulhern was the registered holder of all of the issued share capital in each of the third and fourth respondents;

(b)Michael Richard Mulhern was the registered holder of one half of the issued share capital in the second respondent;

(c)The second respondent was the registered holder of all of the issued share capital of the fifth respondent; and

(d)The third respondent was the registered holder of all of the issued share capital of the sixth respondent.

2.As at 3 February 2010, all of the issued share capital in each of the third and fourth respondents and one half of the issued share capital of the second respondent vested in the applicant pursuant to s 58(1)(a) of the Bankruptcy Act 1966 (Cth).

3.The applicant is entitled to be registered as the holder of all of the issued share capital in each of the third and fourth respondents and one half of the issued share capital in the second respondent.

AND THE COURT ORDERS THAT:

4.The third and fourth respondents register the applicant as the holder of all of the issued share capital in each of the third and fourth respondents and that the second respondent registered the applicant as the holder of one half of the issued share capital in the second respondent.

Note:Settlement and entry of orders…

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Pearce v Mulhern [2010] FCA 446
Case
[2010] FCA 446
Decision Date

CaseChat Overview and Summary

In Pearce v Mulhern, the dispute involves the applicants, who are the Official Trustee in Bankruptcy, seeking declarations regarding the shareholdings of Mr Mulhern in several companies. The case was heard in the Federal Court of Australia. The applicants sought to clarify Mr Mulhern's shareholdings in the second to sixth respondents as of the date of his bankruptcy, arguing that certain forms submitted to ASIC under the Corporations Act 2001 (Cth) were inaccurate or misleading.

The primary legal issue the court had to address was whether the declarations sought by the applicants, which would establish Mr Mulhern's shareholdings as of the date of his bankruptcy, could be made based on the evidence provided. Specifically, the court needed to determine if the lack of evidence from the respondents regarding certain transactions recorded in Form 484s could be used to support the inference that those transactions did not occur or should not be considered contrary to the company registers. Additionally, the court considered Mr Mulhern's failure to respond to requests for information as relevant to the case.

The court found that the respondents' failure to produce any evidence of the transactions recorded in the Form 484s supported the inference that those transactions did not occur or should not be treated as evidence contrary to the company registers. This inference was further supported by Mr Mulhern’s non-response to the request for information made by Mr Pearce in February 2010. Based on the evidence presented by Mr Pearce regarding the contents of the company registers, and relying on section 176 of the Act, the court concluded that the declarations and orders sought by the applicants should be granted. This means that the applicants are entitled to be registered as the holders of the shares in the relevant companies, and the respondents were ordered to register the applicants as such.

In summary, the court granted the declarations and orders sought by the applicants, finding that Mr Mulhern held specific shares in the second to fourth respondents as of 3 February 2010, and these shares vested in the applicants as of the date of Mr Mulhern’s bankruptcy.

Orders

Orders of the court

4. The third and fourth respondents register the applicant as the holder of all of the issued share capital in each of the third and fourth respondents and that the second respondent registered the applicant as the holder of one half of the issued share capital in the second respondent.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I do not consider this document constitutes any evidence to the contrary of the records of the company registers of the second to sixth respondents, as detailed by Mr Pearce in his evidence.CONCLUSION I consider the failure of the respondents to produce any evidence of the transactions recorded in the Form 484s provides support for the inference that those transactions did not, in fact, occur, or more relevantly, that the transactions asserted in those forms should be not treated as evidence to the contrary of the matters recorded in the company registers for the respondent companies. I consider these inferences are further supported by Mr Mulhern’s failure to respond to the request for information Mr Pearce made of him in February 2010. For these reasons, based upon the evidence of Mr Pearce about the contents of the company registers for the respondent companies, and relying upon s 176 of the Act, I find that, as at 3 February 2010, Mr Mulhern held one half of the issued shares in the second respondent and all of the issued shares in the third and fourth respondents. I also find that, as at the same date, the second respondent held all of the issued shares in the fifth respondent and the third respondent held all of the issued shares in the sixth respondent. I therefore propose to make each of the declarations and orders sought by the applicants.

Ratio Decidendi

Legal Principle Established

In the circumstances I have just outlined, I decided to proceed to hear the applicants’ application for substantive relief on the separate questions. THE DECLARATIONS AND OTHER RELIEF SOUGHT In summary, paras A1 to A4 of the application seek the following declarations that, as at 3 February 2010, Mr Mulhern:(1)was the holder of one half of the shares in the second respondent and that the second respondent, in turn, held all of the shares in the fifth respondent;(2)was also the holder of all of the shares in the third respondent and that the third respondent, in turn, held all of the shares in the sixth respondent; and(3)was the holder of all of the shares in the fourth respondent. Further, declarations were sought that the shares Mr Mulhern held in the second, third and fourth respondents vested in the applicants as at the date of Mr Mulhern’s bankruptcy and that the applicants were entitled to be registered as the holders of those shares. Finally, the applicants sought an order that the second to fourth respondents, inclusive, register the applicants as the holders of those shares.THE DOUBT ABOUT MR MULHERN’S SHAREHOLDINGS It may be noted that the applicants have essentially sought these declarations to remove any doubt about Mr Mulhern’s shareholding in the second to fourth respondents and, indirectly, the fifth and sixth respondents, as at the date of his bankruptcy. The doubt, if there be any doubt about Mr Mulhern’s shareholdings as at the day he was declared bankrupt, has been raised by a number of Change of Company Detail forms lodged under the provisions of the Corporations Act 2001 (Cth) (“the Act”), commonly referred to as Form 484s, in relation to each of the second to sixth respondents. Those Form 484s were electronically lodged with Australian Securities and Investments Commission (“ASIC”) by Lock & Associates on behalf of the respondents during March 2009. The requirement to lodge those forms is contained in s 178A of the Act. In summary, that section requires a company to notify ASIC in the prescribed form – here, relevantly, a Form 484 – if it is required to add or alter a particular in the register it maintains under s 169 of the Act. Section 168 of the Act relevantly requires a company to set up and maintain a register of members under s 169. That section sets out the information that must be recorded in the company’s register. That information includes the name and address of each member, the date upon which and the number of shares allocated in each allotment of shares that takes place, the number and class of shares held by each member and the amount paid or unpaid on those shares. In this instance, the information in each Form 484 was stated in the form to be certified as true and correct by Mrs Mulhern in her capacity as a director of each of the second to sixth respondents. The forms variously gave notice of the following changes to the register of members for the second to sixth respondents. In relation to the second respondent, that from 23 February 2009 Mr Mulhern’s one share in that company was cancelled under s 258D of the Act. This purported to leave Mrs Mulhern holding the sole remaining share in the second respondent.