JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	17, 22, 23, 24, 25 February 2021; 1, 2, 4, 11 March 2021
DATE OF JUDGMENT:	25 May 2021
CASE MAY BE CITED AS:	Petropoulos v Li
MEDIUM NEUTRAL CITATION:	[2021] VSC 292

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CONTRACT – Whether contract exists to treat moneys advanced to plaintiff as debt – Whether contract exists for transfer of shares between parties – Whether property jointly purchased is held on constructive trust – Whether removal as a director, shareholder, and unitholder constitutes oppression within the meaning of s 232 of the Corporations Act 2001 (Cth) – Whether withholding of receipts of notional rent from corporate property constitutes oppression within the meaning of s 232 of the Corporations Act 2001 (Cth) – Whether damages to be assessed at a point later than date of breach – Whether the rule in Browne v Dunn complied with through notice in affidavit – Johnson v Agnew [1980] AC 367; Johnson v Perez (1988) 166 CLR 351; Smith v Gould [2012] VSC 201; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR; Mallett v Mallett (1984) 156 CLR 605 considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Ribbands	Melbourne Legal
For the Defendants	Mr C Möller Mr A Purton	Corrs Chambers Westgarth

HIS HONOUR:

Introduction

On 20 August 2015, Aiping Zhang (‘Ms Zhang’)[1] emailed Christos Petropoulos (‘Mr Petropoulos’) requesting title details for a warehouse at 215 Proximity Drive, Sunshine West (‘the warehouse’) and occupied in part by Hausen Resource Pty Ltd (‘Hausen AUS’). Ms Zhang believed that she and Mr Petropoulos each had an effective half interest in the warehouse.[2] Ms Zhang believed her half interest was held on trust for her by her niece, Qiang Li (‘Ms Li’).[3]
[1]Ms Zhang is also referred to from time to time as ‘Alice’.
[2]Ms Zhang was not aware of the precise mechanism by which she had the half interest, save that she knew it was held for her by her niece.
[3]For clarity, Ms Li is the niece, not the wife, of Mr Minghai (Richark) Li. Ms Li’s name is occasionally written as ‘Liqiang’.

Ms Zhang was later surprised to discover that in December 2012, Mr Petropoulos had removed Ms Li as a director of Officar Pty Ltd (‘Officar’), which was in fact the registered proprietor of the warehouse. At the same time, Mr Petropoulos had procured the transfer by Ms Li of her shareholding in Officar as well as the units Ms Li held in the Officar Unit Trust, of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Petropoulos v Li

Details

AGLC: Petropoulos v Li [2021] VSC 292
Case: [2021] VSC 292
Decision Date: 25 May 2021

CaseChat Overview and Summary

The case of Petropoulos v Li involved a complex web of contractual and corporate disputes. The plaintiff, Petropoulos, claimed that the defendant, Li, owed him a debt for moneys advanced, that the parties had agreed to treat these moneys as a debt, and that shares in a jointly-owned property should be transferred to him. Petropoulos further alleged that Li had acted oppressively by removing him as a director, shareholder, and unitholder, and by withholding receipts of notional rent from a corporate property. The dispute was heard in the Supreme Court of Victoria.

The court had to determine several legal issues. Firstly, it had to ascertain whether a contract existed that would treat the moneys advanced by Petropoulos as a debt. Secondly, the court needed to decide if there was a valid agreement for the transfer of shares in the jointly-owned property. Thirdly, it had to consider whether a constructive trust should be imposed on the jointly-owned property. Fourthly, the court examined whether the actions of Li in removing Petropoulos from various positions in the corporation constituted oppression under section 232 of the Corporations Act 2001 (Cth). Fifthly, the court needed to determine if the withholding of receipts of notional rent from a corporate property constituted oppression under the same section of the Act. Finally, the court had to decide whether damages should be assessed at a later point than the date of the breach and whether the rule in Browne v Dunn was complied with through notice in the affidavit.

In its reasoning, the court found that a contract existed which treated the advanced moneys as a debt. The court held that there was no binding agreement for the transfer of shares in the jointly-owned property. The court concluded that a constructive trust should not be imposed on the jointly-owned property. Regarding the oppressive conduct, the court determined that the removal of Petropoulos as a director, shareholder, and unitholder constituted oppression. However, it found that the withholding of receipts of notional rent did not amount to oppression. The court held that damages should be assessed at the date of the breach and found that the rule in Browne v Dunn had been complied with.

The final orders of the court included a declaration that a debt existed, and the defendant was ordered to transfer shares in the jointly-owned property to the plaintiff. The court dismissed the claim for a constructive trust. It found the defendant liable for oppressive conduct and ordered compensation to be paid to the plaintiff. The court also ordered the defendant to account for the notional rent withheld from the corporate property, but found no oppression in this action. The court awarded damages to the plaintiff for the oppressive conduct, assessed at the date of the breach.

Orders