Re Botanical Water Holdings Pty Ltd
[2013] VSC 96
•13 March 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
No. S CI 4564 of 2011
| IN THE MATTER OF BOTANICAL WATER HOLDINGS PTY LTD BETWEEN: AGAO NOMINEES PTY LTD and OTHERS | Plaintiffs |
| v | |
| AJ PHOENIX PTY LTD and ORS | Defendants |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 and 6 December 2012 | |
DATE OF JUDGMENT: | 13 March 2013 | |
CASE MAY BE CITED AS: | Re Botanical Water Holdings Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 96 | |
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CORPORATIONS – Whether or not a share holding in the company was validly altered as recorded on the register of companies kept by ASIC – Shareholding not validly altered – Declaration made accordingly – Finding that plaintiff not appointed as a director as he claimed – Order that ASIC register of companies be rectified accordingly –Corporations Act 2001, s 1342(4)(b).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | LEP Magowan | Melbourne Legal Partners Pty Ltd |
| For the First Defendant | No appearance | |
| For the Second Defendant | No appearance | |
| For the Third Defendant | No appearance | |
| For the Fourth Defendant | Mr Abdou appeared in person | |
| For the Fifth Defendant | No appearance | |
| For the Sixth defendant | No appearance |
HIS HONOUR:
Introduction and summary
Dr Kambouris (the second plaintiff), is an industrial chemist who invented a process to recover energy enriched water from fruit. Mr Moussi is a longstanding friend of Dr Kambouris. Dr Kambouris and Mr Moussi wished to commercially exploit Dr Kambouris’ invention. Dr Kambouris and Mr Moussi were introduced to Mr Abdou (the fourth defendant) and Mr Papadimitriou, who were experienced property developers, to consider means of raising capital to exploit the invention.
In 2010, Dr Kambouris and Mr Moussi, and Mr Abdou and Mr Papadimitriou agreed to enter into a joint venture together to exploit the invention. Relevantly, the parties agreed that Mr Moussi would falsely claim to be the inventor of the process the subject of the patent application. Mr Moussi would then assign the invention to a company incorporated for the purpose of the joint venture, Botanical Water Holdings Pty Ltd (the sixth defendant) (Botanical Water Holdings). Dr Kambouris would have a 51% interest in Botanical Water Holdings through his company, AGAO Nominees Pty Ltd (the first plaintiff) (AGAO), Mr Abdou and Mr Papadimitriou would have 45% through their company, AJ Phoenix Pty Ltd (the first defendant), and Mr Moussi 4% through his company, Play Australia Pty Ltd (the third plaintiff). It was agreed that AGAO would act as trustee for a family trust settled for the benefit of Dr Kambouris and his family.
The parties sought to hide the involvement of Dr Kambouris in this joint venture from his then employer, Australian Vintage Limited (AVL). The parties were concerned that if AVL knew of Dr Kambouris’ involvement, AVL may claim the benefit of the invention or take proceedings against Dr Kambouris. To that end, Mr Moussi falsely represented that he was the inventor, and Mr Abdou was appointed the sole director of AGAO and of Botanical Water Holdings. A search of the shareholders of Botanical Water Holdings would not disclose any interest of Dr Kambouris.
With this structure in place, the joint venturers then set about undertaking the necessary steps to raise millions of dollars to exploit the invention. An information memorandum was prepared, seeking to raise moneys, but for reasons that it is not necessary to discuss in full, the venture failed. Large expenses were incurred in preparing the information memorandum and the parties fell out. The joint venture has not proceeded any further.
This proceeding concerns two disputed transactions. First, in September 2010, a form was lodged with ASIC giving notice of an altered shareholding in Botanical Water Holdings. The table below shows the alteration. In a nutshell, Mr Abdou says that the altered shareholding was agreed to by the joint venturers at a meeting on the night of 18 July and morning of 19 July 2010. Dr Kambouris denies attending such a meeting, or that any such agreement was reached. Dr Kambouris seeks a declaration that the shareholding is that originally established, and seeks an order directing ASIC to rectify the shareholding as recorded in the register of companies for Botanical Water Holdings back to the original shareholding.
Secondly, Dr Kambouris says that he was validly appointed a director of Botanical Water Holdings on 1 September 2012, but that on 10 September 2010 ASIC was improperly informed that his appointment was revoked and the register of companies record for Botanical Water Holdings was altered accordingly. He seeks an order directing ASIC to rectify the register of companies for Botanical Water Holdings.
The issues and conclusions
Thus, the issues are:
(a) Did Dr Kambouris agree, at a meeting with Mr Abdou, Mr Papadimitriou, and Mr Moussi on 19 July 2010, that the shareholding of Botanical Water Holdings should be altered?
(b) Was Dr Kambouris appointed a director of Botanical Water Holdings on 10 September 2010?
(c) If he was, was Dr Kambouris removed as a director on 21 September 2010?
Despite the apparent improper behaviour by all parties in establishing the joint venture, I am satisfied on the balance of probabilities that the shareholding was not altered as alleged by Mr Abdou. I am not satisfied on the balance of probabilities that that Dr Kambouris was appointed a director of Botanical Water on 10 September 2010.
Share structure in Botanical Water Holdings
Original shareholding
shares
% Shares allegedly issued 19 July 2010 Altered shareholding % AGAO 510 51 299,490 300,000 30 AJ Phoenix 450 45 599,550 600,000 60 Play Australia 40 4 39,960 40,000 4 AJ Phoenix (ATF employee incentive scheme) 40,000 40,000 4 Capital Raising 10,000 10,000 1 Desa 10,000 1 Total 1000 100% 1,000,000 100% Affidavits relied on by the plaintiffs
The proceeding was commenced by originating process supported by affidavits. The plaintiffs rely on the following affidavits which were received into evidence:
(a) Ambrosios (Bruce) Kambouris of 5 September 2011 and 24 February 2012
(b) Andrew Moussi of 6 September 2011 and 10 February 2012;
(c) Greg Gregory of 7 September 2011 and 16 February 2012;
(d) Gillian Kambouris of 24 February 2012; and
(e) Mark Steven Goldblatt of 24 February 2012.
Initially, AJ Phoenix, Capital Raising (the second defendant), Desa Nominees (the third defendant) and Mr Abdou were represented by Davies Moloney solicitors. Davies Moloney ceased to act for those defendants on 15 November 2012.
At the trial, Mr Abdou appeared in person. Mr Brett Barr, a director of Desa Nominees, the third defendant, attended Court. He was advised that he did not have standing to appear for Desa Nominees. Mr Barr informed the Court that Desa Nominees was happy for the shares purportedly issued to it to be cancelled. Mr Magowan, who appeared for the plaintiffs, said the effect of the declaration the plaintiffs sought would achieve that result.
Mr Abdou informed the Court that he was not relying on the affidavits of Mr Harle, Mr Papadimitriou, and Mr Adamis but may wish to rely on the affidavit of Mr Marinopoulos. Mr Abdou also said he may seek to rely on evidence from a solicitor, Mr Brett Connor. As events transpired, Mr Connor was not called, and the only evidence led by Mr Abdou was his own.
I informed the plaintiffs that I was troubled by the fact that I was being asked to decide the case on affidavit material and without seeing the witnesses. I indicated that I had read the affidavits relied on by the plaintiffs and that those affidavits suggested that although Dr Kambouris claimed to be the inventor of the water recovery process, he permitted the patent application to be lodged in the name of Mr Moussi. There may be an innocent explanation for this conduct, but I was not provided with one. The plaintiffs said that this behaviour was irrelevant. In my opinion, it was relevant as it went to the credit of Dr Kambouris and Mr Moussi.
Mr Magowan, counsel for the plaintiffs, informed the Court that the plaintiffs proposed to rely on their affidavits without the witnesses attending.
The plaintiffs closed their case after formally tendering the affidavits they relied on, as set out above. Mr Abdou tendered his affidavit, gave further oral evidence, and was cross-examined extensively.
The affidavit material
Evidence in chief of Dr Kambouris
Dr Kambouris is an industrial chemist. He says that he is the inventor of the process described in provisional patent application 2010101445: recovering water. Dr Kambouris holds a Doctorate in Industrial Chemistry.
Dr Kambouris says that in February 2010, he met with Mr Abdou and John Papadimitriou. He says that Mr Abdou and Mr Papadimitriou made representations to him regarding their business experience and capacity to raise capital. Dr Kambouris says that based on these representations, he invited them to form a joint venture to commercialise his invention.
Dr Kambouris says that he negotiated and reached agreement with Mr Abdou and Mr Papadimitriou for the formation of a new company, Botanical Water Holdings Pty Ltd, to be jointly owned between them and used as the vehicle for commercialising his invention. He says that in accordance with his agreement with Mr Abdou and Mr Papadimitriou, Botanical Water Holdings and AGAO were incorporated as referred to above.
Dr Kambouris says that the incorporations were carried out by Mr Harle, an associate of Mr Abdou. Dr Kambouris says that he was induced by Mr Abdou to believe that Mr Harle was a practising solicitor. In fact, Mr Harle’s practising certificate had been suspended.
Botanical Water Holdings and AGAO were incorporated on 10 March 2010. As agreed, Mr Abdou was appointed the sole director of each.
Dr Kambouris says that in late August 2010, he became concerned at the lack of progress made by Mr Abdou and Mr Papadimitriou in raising capital for Botanical Water Holdings.
Dr Kambouris says that in August 2010, his friend Andrew Moussi informed him it was inappropriate that Mr Abdou was acting as sole director of AGAO and suggested that he should seek to remove Mr Abdou as director of AGAO.
Dr Kambouris says that on 6 September 2010, Mr Abdou resigned as a director of AGAO and Mr Moussi was appointed the sole director of AGAO.
Dr Kambouris says that on 10 September 2010, he attended a meeting at a business premises of Botanical Water Holdings’ accountant, Greg Gregory, at Flat 2, 56 Vincent Place North, Albert Park, with Mr Gregory, Mr Abdou, and Mr Papadimitriou. Dr Kambouris says that at this meeting he requested to be appointed as a director of Botanical Water Holdings, in addition to Mr Abdou. Dr Kambouris says that Mr Abdou agreed to his request, and at the meeting Mr Abdou signed a statement of Dr Kambouris’ consenting to act as a director.
Dr Kambouris says that in the presence of the meeting attendees, Mr Gregory then notified ASIC of Dr Kambouris’ appointment as a director using the internet portal available to Mr Gregory as an ASIC registered agent. Dr Kambouris says that after Mr Gregory completed notifying ASIC, Mr Gregory printed out a record of the details then held by ASIC regarding Botanical Water Holdings and handed the printout to Dr Kambouris as a record of Botanical Water Holdings’ details.
Dr Kambouris says that on 21 September 2010, he became aware of certain matters, including that:
(a)information provided to him by Mr Abdou and Mr Papadimitriou regarding the progress of their capital raising was false; they had no prospect of raising capital;
(b)Mr Papadimitriou was an undischarged bankrupt and that he had failed to disclose this to Dr Kambouris; and
(c)Mr Harle was serving a current ban from acting as a legal practitioner because of previous professional misconduct.
Dr Kambouris says that late on the morning of 25 September 2010, Mr Abdou became aware of Dr Kambouris’ knowledge of those matters. Dr Kambouris says that he believes this knowledge gave Mr Abdou motivation to cause illegitimate documents to be filed with ASIC so as to prevent AGAO exerting control over Botanical Water Holdings.
Dr Kambouris says that he is now aware that on 21 September 2010, a Form 106 was lodged with ASIC in respect of Botanical Water. Dr Kambouris says that the effect of this Form 106 was to request ASIC to amend its records by removing the Form 484 lodged by Mr Gregory on 10 September 2010 to notify of Dr Kambouris’ appointment as director of Botanical Water Holdings.
Dr Kambouris says that he was not consulted regarding the submission of this Form 106 and that there are no grounds for his removal as a director of Botanical Water Holdings.
Dr Kambouris says that on 21 September 2010, a Form 484 was lodged with ASIC for Botanical Water Holdings. Dr Kambouris says this lodgement notified ASIC regarding a purported issue of 999,000 shares in Botanical Water Holdings that would dilute AGAO’s ownership in Botanical Water Holdings from 51% to 30% and increase AJ Phoenix’s ownership from 45% to 64%. Dr Kambouris says this change in ownership would effect a change in control of Botanical Water Holdings. Dr Kambouris says that the Form 484 purports to allocate 1% of the “new” shareholdings to each of Capital Raising Solutions Pty Ltd (the second defendant) and Desa Nominees Pty Ltd (the third defendant).
Dr Kambouris says that in his capacity as director of Botanical Water Holdings, he did not consent to nor approve the change in share structure of Botanical Water Holdings or the purported issue of shares to Capital Raising Solutions and Desa Nominees.
Evidence-in-chief of Andrew Moussi
By his affidavit of 6 September 2011, Mr Moussi describes himself as a technology consultant/company director. At the relevant time, he was employed by the ANZ Bank. He says that he is the sole director of AGAO and has been so since his appointment on 6 September 2010. Mr Moussi says he is also the sole director and shareholder of Play Australia Pty Ltd.
Mr Moussi says that he has read the affidavit of Dr Kambouris sworn 26 August 2011 and agrees with the contents of the affidavit.
Mr Moussi says that on or about August 2010, Dr Kambouris stated to him that he was concerned about the lack of progress made by Mr Abdou and Mr Papadimitriou in raising capital for the joint venture.
Mr Moussi says that on 8 July and in August 2010, he had conversations with Dr Kambouris whereby he came to learn that:
(a)Dr Kambouris held his 51% in Botanical Water Holdings as beneficiary under a discretionary trust, named the Kambouris Family Trust (the Trust), with the legal interest in Botanical Water Holdings being held by AGAO;
(b)AGAO, at all times, was the trustee of the Trust; and
(c)Mr Abdou was at all times the sole director of AGAO.
Mr Moussi says that in conversation with Dr Kambouris in late August 2010, Mr Moussi explained that he believed that Mr Abdou acting as sole director of AGAO represented a conflict of considering that AGAO, which was trustee of the Trust, controlled 51% of Botanical Water Holdings and that Mr Abdou held a competing interest in Botanical Water Holdings (as a minority shareholder held through AJ Phoenix). Accordingly, he says, he advised Dr Kambouris that he should arrange a more suitable person other than Mr Abdou to act as the sole director of AGAO.
Mr Moussi says that on 6 September 2010, Mr Abdou begrudgingly resigned as director of AGAO, at the insistence of Dr Kambouris. Mr Moussi says that on the same date as Mr Abdou’s resignation, he replaced Mr Abdou as AGAO’s sole director.
On 18 September 2010, Mr Moussi says that he attended a meeting at 416 Nepean Highway, Chelsea (Mr Harle’s office), attended also by Mr Abdou and Mr Papadimitriou. Mr Moussi says that at this meeting, Mr Abdou presented him with documents and requested that Mr Moussi sign these documents. Mr Moussi says that these documents had the purported effect of diluting AGAO’s interest in the company. Mr Moussi said that he refused to sign these documents, whereupon Mr Papadimitriou became angry and abusive towards him, and stated words to the effect that Mr Abdou could nevertheless sign the documents on behalf of AGAO by backdating the signature predating Mr Abdou’s removal as the sole director of AGAO on 6 September.
On or about 22 September 2010, Mr Moussi says that he received an email alert from ASIC notifying him of the lodging of a Form 484 by Botanical Water Holdings on 21 September 2010. He said that he searched ASIC’s records and learnt that Botanical Water Holdings had purportedly notified ASIC of the issue of 999,000 shares which would have resulted in AGAO’s ownership in the company being diluted from 51% to 30%. Mr Moussi says that the Form 484 was signed by Mr Abdou for Botanical Water Holdings. Mr Moussi says that in his capacity as the sole director of each of AGAO and Play Australia, he had not given his consent, nor did he have any knowledge of the basis upon which Botanical Water Holdings purported to make the issue of 999,000 shares referred to in the Form 484 lodged with ASIC on 21 September 2010. Mr Moussi says that in his capacity as the sole director of each of AGAO and Play Australia, he had not given his consent to the allocation of shares to Capital Raising Solutions and Desa Nominees.
Mr Moussi refers to the purported revocation of the appointment of Dr Kambouris as a director of Botanical Water Holdings. He says that as the sole director of AGAO and Play Australia, he had no knowledge of this purported revocation, nor did he consent to the same.
Mr Moussi refers to pre-emptive rights given in the Constitution of Botanical Water Holdings. He says that neither AGAO nor Play Australia has been furnished with the pre-emptive pro rata offer required under the Constitution, and neither has either of those companies provided a waiver of their pre-emptive rights.
Mr Moussi says that on 7 February 2011, he wrote to Mr Abdou in his capacity as a director of Botanical Water Holdings, requesting an explanation for the issue of the 999,000 shares. He says that he received no response to that letter.
Evidence-in-chief of Mr Gregory
In his affidavit of 6 September 2011, Mr Gregory said that he is a qualified accountant and that he is the authorised lodging agent for Botanical Water Holdings.
Mr Gregory refers to three documents lodged with ASIC:
(a)the Form 484 received by ASIC on 10 September 2010, advising of the appointment of Dr Kambouris as a director of Botanical Water Holdings;
(b)the Form 484 received by ASIC on 21 September 2010, advising of a change in the shareholding; and
(c)the Form 106 received by ASIC on 21 September 2010, advising of the revocation of the lodgement of the notice of appointment of Dr Kambouris as a director of Botanical Water Holdings.
Mr Gregory says that on 10 September 2010, he attended a meeting at his offices in Albert Park. He says that this meeting was also attended by Dr Kambouris, Mr Abdou, and Mr Papadimitriou. At this meeting, Mr Abdou requested that Mr Gregory act as a lodging agent for Botanical Water Holdings. Mr Gregory says that he was a registered ASIC agent, and that this meant that he was able to lodge forms to change the details of a company through an online portal run by ASIC. Mr Gregory says that he agreed to be the lodging agent of Botanical Water Holdings.
Mr Gregory says that at the meeting of 10 September 2010, Mr Abdou requested that Dr Kambouris be appointed as a director of Botanical Water Holdings (in addition to Mr Abdou). Mr Gregory says that in the presence of all attendees, Dr Kambouris agreed to this request and Mr Abdou signed the change of directors document. Mr Gregory says he immediately notified ASIC of the appointment of Dr Kambouris as a director through the internet portal available to ASIC registered agents. Mr Gregory says that once he had finished notifying ASIC, he immediately printed out a record of the details then held by ASIC pertaining to Botanical Water Holdings and handed the printout to Dr Kambouris as a record.
In relation to the purported change of shareholding, Mr Gregory says that on 21 September 2010, Mr Abdou, Mr Papadimitriou, and Mr Harle attended his offices. He says that at the meeting, Mr Harle, in the presence of Mr Abdou and Mr Papadimitriou, handed Mr Gregory minutes of a directors’ meeting dated 1 April 2010 which purported to show a resolution of Botanical Water Holdings’ then director, Mr Abdou, changing the shareholding. Mr Gregory says that he assumed that the minutes were authentic. Mr Gregory says that then he prepared the ASIC form for the purported change of shareholding in accordance with the resolution recorded in the minutes and then lodged the form with ASIC.
Mr Gregory says that he took a copy of the minutes and handed the original back to Mr Harle. Mr Gregory says that he has searched his office thoroughly for a copy of the minutes and has not been able to locate it.
In relation to the purported revocation of Dr Kambouris’ appointment as a director of Botanical Water Holdings, Mr Gregory says that the form notifying ASIC of the revocation has purportedly been lodged by him as the “lodging agent”. Mr Gregory says that he did not lodge this document. He says that the document records quite technical “details of correction”. He says that the details of correction speak of him in the third person. He says that it is not his custom to speak of himself in the third person. He says that he has no knowledge of the subject matter of the “details of correction”.
Mr Gregory says that he is unable to explain how the purported revocation came to be lodged from his ASIC lodging agent account.
Mr Gregory says that in September 2010, Mr Abdou, Mr Harle, and Mr Papadimitriou regularly held meetings at his office. Mr Gregory says that his password for the ASIC portal was automatically saved, and so any person who had access to his computer could have lodged the document.
Affidavit evidence of Mr Abdou
Before I turn to the further affidavits in reply of Dr Kambouris, Mr Moussi, and Mr Gregory, it is convenient to go to the affidavit of Mr Abdou.
By his affidavit of 22 September 2011, Mr Abdou says that Capital Raising is a company of which Mr Harle is a director. Mr Abdou says that Capital Raising is a company controlled by Mr Brett Barr, who provided advice in relation to capital raising and the investment memoranda.
Mr Abdou says that in early February 2010, Mr Papadimitriou and he had a meeting with Dr Kambouris. Mr Abdou says that Dr Kambouris was then a chemist employed by AVL, which was a large wine company. Mr Abdou says that Dr Kambouris was anxious to go into a joint venture of some sort to exploit a process for extracting low sugar water from fruit. Dr Kambouris told him that the inventor of the process the subject of the patent application was a friend of his, Andrew Moussi, and that Mr Moussi was handling the business matters on Mr Moussi’s behalf. Mr Abdou said it was agreed that Mr Moussi would receive 4% of the company through his company, Play Australia Pty Ltd, as the inventor. Mr Abdou said that he was to receive 45% of the company through his company, AJ Phoenix, and Dr Kambouris was to receive 51% of the company.
Mr Abdou says that for his share, that he was to arrange to fund the set-up vehicle, the establishment costs, and the capital raising for the venture.
Mr Abdou says that that Dr Kambouris wanted him to be a director of AGAO. Mr Abdou says that it was his understanding that Dr Kambouris was still employed by AVL and that if Dr Kambouris was appointed director of AGAO, it may have put his position in jeopardy. Mr Abdou says that he understood that Dr Kambouris had undertaken similar work for AVL. Mr Abdou says he was happy enough to be the director of AGAO.
Mr Abdou says that on 10 March 2010, AGAO and Botanical Water Holdings were set up and that the shareholdings were as described in Dr Kambouris’ affidavit. He says that the following day, the patent for extracting water was assigned by Mr Moussi to Botanical Waters Holdings.
Mr Abdou says that he was always a bit confused about whose invention it was. He says that Mr Moussi was a computer expert with the ANZ Bank, whereas Dr Kambouris was the industrial chemist with a PhD. He says that the invention was supposed to belong to Mr Moussi. He says that Dr Kambouris and Mr Moussi were good friends and worked well together, and Mr Abdou says he accepted the arrangement about the patent and did not question it.
Mr Abdou says that they (presumably, the joint venturers) all then commenced spending a significant amount of time working together:
(a)they looked for storage facilities in Mildura;
(b)they secured low sugar juice from carrot juice manufacture from a company called Lamatina;
(c)they looked for a factory, suppliers and distributors;
(d)they arranged Freehills Patent and Trademark Attorneys to lodge an international patent convention treaty application;
(e)they engaged Strategic Intelligence Group Pty Ltd to provide advice in relation to fundraising and preparation of the Investment Memorandum;
(f)they appointed Mr Gregory as accountant; and
(g)they appointed Ausglobal Securities Pty Ltd and Armytage Corporate Lawyers Pty Ltd to advise the company.
Mr Abdou says that on or about 12 April 2010, Mr Kambouris resigned from AVL. Mr Abdou says that Dr Kambouris was almost immediately threatened with legal action by AVL. Mr Abdou says that “we” arranged and paid for him to be represented by Watkins Boag O’Connor and Dunne. Mr Abdou says that as Dr Kambouris had no income, Mr Abdou paid him an allowance of $6,000 per month and also paid his expenses, including flights to and from Mildura and Melbourne. Mr Abdou says that he also provided him with a computer and telephone so that he could continue to work.
Mr Abdou says that they all became good friends and saw each other several times a week. Mr Abdou says that either Mr Papadimitriou or himself would collect Dr Kambouris when he flew in to Melbourne from Mildura. Mr Abdou says that “we” had Dr Kambouris and his wife out to “our” home for dinner. Mr Abdou says that “we” went to Mildura at least ten times where he saw “our” advisers, accountants and lawyers together.
Mr Abdou says that in late May and June 2010, the process was progressing quite well. Mr Abdou says they were all friends and that they had managed to resolve Dr Kambouris’ legal problems (presumably with AVL). Mr Abdou says that Dr Kambouris said to them in several of their meetings that he, Mr Papadimitriou and Mr Abdou each should be equal partners. Mr Abdou says that Dr Kambouris said that, “We were like brothers and we had helped him out when he was in trouble. He said that we should all be equal in the project.”
Mr Abdou says that this was not said once, but was said several times in late May and June 2010. Mr Abdou says that he can recall it occurring at 416 Nepean Highway, Chelsea, and at other places in the presence of Mr Harle, Mr Barr, and Mr Marinopoulos. Mr Abdou says that this was good for them and they did not object to it. He says that they also agreed that Mr Moussi would maintain his 4% share and that some other shareholding would be given to Mr Harle’s company and to Mr Barr’s company. Mr Abdou says that this was partly as payment, and partly as an incentive to keep their interest in the venture and for them to defer payment for their services in relation to capital raising.
Mr Abdou says that he spoke to Mr Harle about how this could be done. Mr Abdou says that Mr Harle told him that one way it could be done was to increase the shareholding of Botanical Water from 1,000 up to 1,000,000 shares and realign the shareholding to get the desired ratio of shareholding.
Mr Abdou says that on (Monday) 19 July 2010, a meeting was held at 80/109 Clarendon Street, Southbank (Mr Moussi’s apartment), at which he was present. He says that Mr Moussi, Dr Kambouris, and Mr Papadimitriou were also present. Mr Abdou says that they held a meeting of the members of Botanical Water Holdings and the members agreed that the 1,000 fully paid shares were to be converted into 999,000 additional fully paid shares.
Mr Abdou says that on 19 July 2010, he contacted Mr Harle and asked him to prepare a suitable minute and the necessary documentation, including share applications for the additional 999,000 shares to change the company records. Mr Abdou exhibits (as AA-3) a true copy of the minutes which are dated and signed by him on 20 July 2010, and the register of members showing the new shareholding and copies of the share applications.
The minutes exhibited recorded a resolution of shareholders held on 19 July 2010 at Unit 80/190 Clarendon Street, Southbank. Under the heading of “Notice”, it provided:
Noted that the requirements for abridgment of notice of meeting have been satisfied and confirmed on behalf of the company’s shareholders AGAO Nominees Pty Ltd and AJ Phoenix Pty Ltd represented by Ayman Abdou and Play Australia Pty Ltd represented by Andrew Moussi. Also present were Ambrosios Kambouris and John Papadimitriou.
Under the heading, “Share Allotment”, it provided as follows:
The shareholders unanimously resolved to waive their pre-emptive rights under paragraph 79 of the company’s constitution and ratify the previous resolution that the thousand fully paid ordinary shares in the company allotted on incorporation of the company be converted into 1,000,000 fully paid ordinary shares by the allotment of 999,000 additional fully paid shares as follows:
(a) AGAO Nominees Pty Ltd - 299,490 shares
(b) AJ Phoenix Pty Ltd - 599,550 shares
(c) AJ Phoenix Pty Ltd (ATF Employee Incentive Plan) - 40,000 shares
(d) Capital Raising Solutions Pty Ltd - 10,000 shares
(e) Desa Nominees Pty Ltd - 10,000 shares
(f) Play Australia Pty Ltd - 39,960 shares
Total 999,000 shares
It was signed by Mr Abdou as chairman and dated 20 July 2010.
Exhibit AA-3 comprises a resolution of shareholders and 6 documents headed Botanical Water Holdings register of members. The six are all initialled by Mr Abdou. The documents appear to be copies of the register of each of the members of Botanical Waters. Each records a share allotment respectively to AGAO, AJ Phoenix, AJ Phoenix (atf employee incentive plan), Capital Raising, Desa Nominees and Play Australia. The allotments are all dated 1 April 2010.
Mr Abdou says that he clearly recalls signing an application on behalf of AJ Phoenix, receiving the original application signed by Mr Moussi on behalf of Play Australia, and giving such signed original applications to Mr Harle in his office at 416 Nepean Highway, Chelsea. Mr Abdou says that Mr Harle informed him, and he verily believes, that the five original signed share applications disappeared from his office in early November, 2010 together with other documents relating to AGAO, Keepafresh (another company associated with Dr Kambouris that is not relevant to the issues in this case), and Botanical Water Holdings.
During Mr Abdou’s cross-examination, five application for shares by each of Capital Raising, Desa Nominees, AGAO, AJ Phoenix, and Play Australia were recovered from a book of documents Mr Abdou had brought to court, and the applications were tendered into evidence. The applications by Capital Raising and Desa Nominees were signed. Mr Abdou had signed the application by AGAO. The AJ Phoenix and Play Australia applications were not signed. They are all dated 1 April 2010. These appear to be the applications that Mr Abdou was referring to in his affidavit, save that the Play Australia application has not been signed by Mr Moussi.
As indicated above, Mr Moussi says that he was asked to sign an application on 18 September 2010 that had the effect of diluting AGAO share holding.
Mr Abdou says that Mr Harle told him that he had photocopies of the first applications that are part of exhibit AA-3, but had not copied the other two applications, which were received by him after the first three. Mr Abdou says that the loss of the original documents coincides with several instances of unlawful entry into 416 Nepean Highway, as described in Mr Papadimitrou’s affidavit. Mr Papadimitrou’s affidavit was not tendered, nor was he called to give evidence. Mr Harle was not called to give evidence, and little weight can be given to what he reportedly said to Mr Abdou..
Mr Abdou says that in his capacity as sole director of AGAO, and in accordance with the wishes of Dr Kambouris, he signed a minute of directors’ meeting resolving to apply for the allotment of 299,940 shares in Botanical Water Holdings and to waive its pre-emptive rights to apply for further shares (dated 20 July 2010), which he exhibits as AA-4. Exhibits AA-3 and AA-4 do not include any document signed by Dr Kambouris or Mr Moussi.
Mr Abdou says that on about 6 September 2010, Dr Kambouris requested that he resign as a director of AGAO, and that he agreed. Mr Abdou says that Mr Moussi was appointed a director, rather than Dr Kambouris.
Mr Abdou agrees that on 10 September 2010, he met with Dr Kambouris at Albert Park (Mr Gregory’s office, as Dr Kambouris refers to in his affidavit), where Dr Kambouris asked that he become a director of the Keepafresh companies (another venture that Dr Kambouris was undertaking with Mr Abdou, but separate to Botanical Water Holdings), as he wanted to continue with the development of these products. Mr Abdou says that he had spent over $30,000 and did not see much future in it.
Mr Abdou says that he agreed to this happening and that he saw Mr Gregory lodge some documents online. Mr Abdou says that he was not aware that these documents were dealing with Botanical Water Holdings. He says that if he had been so aware, he would not have agreed to the same. He says that he was never handed a copy of the printout as alleged by Mr Gregory. I infer from this evidence that Mr Abdou denies consenting to Dr Kambouris being appointed a director of Botanical Water Holdings.
Mr Abdou says that in November 2010, Dr Kambouris held a shareholders meeting which Mr Abdou did not attend, at which he was removed as a director of Keepafresh Holdings Pty Ltd.
Mr Abdou agrees that he may have met Mr Moussi on 18 September 2010, as Mr Moussi says in his affidavit. He denies, however, that he asked Mr Moussi to sign a share application as Mr Moussi had previously signed a share application.
Mr Abdou takes issue with matters in Mr Gregory’s affidavit. Mr Abdou refers to the meeting held at Mr Gregory’s office on 10 September 2012, which Mr Gregory says was attended by Dr Kambouris, Mr Abdou, and Mr Papadimitriou. (This is the meeting where Dr Kambouris says that it was agreed that he be appointed a director of Botanical Water Holdings.) Mr Abdou says that Mr Marinopoulos, Mr Moussi, and Mr Harle were also in attendance. Mr Abdou says that the Form 484 lodged with ASIC, notifying the appointment of Dr Kambouris, was lodged at 3.47pm at which time, he, Mr Marinopoulos, Mr Harle, and Mr Papadimitriou were not present.
Although Mr Abdou denies that at that meeting he agreed to Dr Kambouris being appointed a director of Botanical Water Holdings, he did not call Mr Harle, Mr Papadimitriou, or Mr Marinopoulos to support his evidence that he only agreed to Dr Kambouris being appointed a director of the Keepafresh companies.
Mr Abdou says that the minute of April 2010 that Mr Gregory refers to is in fact the minute dated 19 July 2010. He says that all parties agreed that the increase in shareholding be effective as from 1 April 2010.
Mr Abdou denies Mr Gregory’s implied suggestion that he (or, I assume, Mr Harle, Mr Papadimitriou, or Mr Marinopoulos) lodged the documents using Mr Gregory’s password. Mr Abdou deposed that Mr Marinopoulos is to swear an affidavit giving details of what exactly happened. Mr Abdou was cross-examined on Mr Marinopoulos’ affidavit of 23 September 2011 by counsel for Dr Kambouris, and, as a consequence, it was admitted into evidence.
Mr Abdou refers to the information memorandum for the issue of Class A shares by Botanical Water Holdings. At p 40 of that document, it lists the shareholding definitely as that arising after the alleged meeting of 19 July. The shareholding shown in that document is the same as that alleged by Mr Abdou and notified to ASIC by Mr Gregory on 21 September 2010.
Affidavit of Mr Marinopoulos of 23 September 2011
As mentioned above, Mr Abdou was cross-examined on Mr Marinopoulos’ affidavit and it was tendered by Mr Abdou. Mr Marinopoulos was not called to give evidence.
Mr Marinopoulos made his affidavit on behalf of the defendants other than ASIC. He is the managing director of Strategic Intelligence Group Pty Ltd (Strategic). He says that Strategic was retained by Botanical Water Holdings to (amongst other services) prepare an Information Memorandum for fundraising for the development and exploitation of a patented process for the extraction of potable water from fruit and vegetable processing waste called Low Sugar Juice (LSJ), which had been acquired by Botanical Water Holdings from Mr Moussi and the subject of the patent application (the Intellectual Property).
Mr Marinopoulos says that Dr Kambouris expressly told him that Mr Moussi was the inventor of the process the subject of the patent application, and that he was not the inventor of the process the subject of the patent application but that he was fully familiar with the invention and in particular with the technical processes to be employed to give effect to the process the subject of the patent application. Mr Marinopoulos says that he recommended to Mr Abdou that Dr Kambouris be used as an expert consultant to the Information Memorandum.
Mr Marinopoulos says that he became aware that Dr Kambouris’ previous employer AVL had claimed that Dr Kambouris had misappropriated some of AVL’s intellectual property including intellectual property relating to the processing of LSJ, similar to the Intellectual Property.
Mr Marinopoulos says that he recommended to Mr Abdou, Dr Kambouris, and the other consultants to the Information Memorandum that Dr Kambouris should not be a director of Botanical Water Holdings as AVL might seek to claim that it was its intellectual property that Botanical Water Holdings was dealing with. Mr Marinopoulos says that all persons involved with the Information Memorandum, including Dr Kambouris, agreed with his recommendation.
Mr Marinopoulos says that he first met Mr Gregory in September 2009, when he was introduced to him by Mr Georgiou, who was then Mr Marinopoulos’ and Strategic’s accountant. Mr Marinopoulos says that at Mr Georgiou’s suggestion, Mr Gregory was appointed as accountant for Botanical Water Holdings and the Information Memorandum.
Mr Marinopoulos takes issue with material parts of Mr Gregory’s affidavit of 7 September 2011.
Mr Marinopoulos says that by early August 2010, the Information Memorandum (comprising approximately 116 pages) was near to its final form and through it Botanical sought to raise $20 million through the issue of “A” class shares.
Mr Marinopoulos refers to p 40 of the draft Information Memorandum, which showed that Botanical Water Holdings had issued 1 million shares held as recorded in its share register, showing 300,000 shares issued to AGAO, and the rest as discussed earlier. Mr Marinopoulos said that in an earlier draft the 1 million shares where shown as being held differently, with AGAO, for example, holding 290,213 shares. Mr Marinopoulos does not disclose where this information came from.
Mr Marinopoulos points out that at pp 42 and 43 of the Information Memorandum, Dr Kambouris is shown as being the Consultant Scientist and Mr Moussi has the role of Acting Director of Technology.
Mr Marinopoulos says that in late July 2011, he asked Mr Abdou to provide him with copies of minutes and share register information of Botanical Water Holdings to confirm the allotment of one million ordinary shares and the basis of the shareholding, and he was provided with a copy of the shareholders minute of meeting of Botanical Water Holdings dated 9 July 2010 and copies of its share register.
Mr Marinopoulos says that on 9 August 2010, he prepared Information Memorandum verification certificates which were signed by the consultants to the Information Memorandum, being Dr Kambouris, Mr Gregory, Mr Abdou, Mr Papadimitriou, and himself. Mr Marinopoulos asserts that by providing the certificates, Dr Kambouris and Mr Gregory knew about the shareholding of the one million issued shares in Botanical Water Holdings and knew that Dr Kambouris was not a director or intended to be a director of Botanical Water Holdings.
Mr Marinopoulos exhibits an Information Memorandum verification certificate signed by Dr Kambouris and dated 9 August 2010. Under that certificate, Dr Kambouris refers to the Information Memorandum dated on or about 9 August 2010 for the issue of class “A” shares by Botanical Water Holdings and says that each statement in the Information Memorandum for which verification and responsibility has been assigned to him is based on the verification source set out in the verification index and that he is satisfied that the material statement is accurate. Dr Kambouris replies to this in his reply affidavit below. Dr Kambouris signed the certificate as the Consulting Chemist to Botanical Water Holdings.
Mr Marinopoulos says that on 9 August, he prepared a form of directors’ resolution of Botanical Water Holdings, formally adopting the Information Memorandum after review of the verification certificates and legal advice. The minute was passed by and signed by Mr Abdou.
Mr Marinopoulos says that on 10 September 2010, he attended the office of Mr Gregory at 2/56 St Vincent’s Place North, Albert Park for the purpose of completing all necessary minutes and other documents for the Information Memorandum, Botanical Water Holdings and its associates, Botanical Water Marketing Pty Ltd, Keepafresh Holdings Pty Ltd and Keepafresh Marketing Pty Ltd. He says that the persons present in addition to himself were Mr Abdou, Dr Kambouris, Mr Moussi, Mr Gregory, Mr Papadimitriou, and Mr Gregory’s employee accountant, Trent Adamis.
Mr Marinopoulos says that all shareholders’ representatives of Botanical Water Marketing, Keepafresh and Keepafresh Marketing were present (all agreed to abridge time and notice for shareholders meetings) and passed resolutions for each of Botanical Water Marketing, Keepafresh and Keepafresh Marketing, appointing Mr Gregory as ASIC agent and Dr Kambouris as an additional director. Mr Marinopoulos says he prepared the respective minutes of shareholders meetings, which he exhibits. They were each signed by Mr Abdou. The point Mr Marinopoulos is seeking to make is that there is a minute for each of Botanical Water Marketing Pty Ltd, Keepafresh and Keepafresh Marketing, but not one for Botanical Water Holdings.
Mr Marinopoulos says that as all shareholders of Botanical Water Holdings were not represented at Mr Gregory’s office on 10 September 2010, he prepared a minute of directors meeting which was passed and signed by Mr Abdou. He says the minute appointed Mr Gregory as Botanical Water Holdings’ ASIC agent, and did not appoint Dr Kambouris as an additional director (as Dr Kambouris asserts).
Mr Marinopoulos exhibits a true copy of the minute of a resolution of directors of Botanical Water Holdings dated 10 September 2010. The resolution is by Mr Abdou alone. It does not contain any reference to an appointment of Dr Kambouris as a director.
Mr Marinopoulos refers to Mr Gregory’s affidavit and the Form 484 electronically filed with ASIC at 3.47pm, notifying that Botanical Water Holdings had appointed Dr Kambouris as a director. He says that he has spoken to Mr Abdou and has been informed by him that he did not sign or authorise any person on his behalf to sign the certificate in his name the Form 484 lodged by Mr Gregory notifying ASIC that Dr Kambouris had been appointed a director on 1 September 2010. It is not signed by anybody.
Mr Marinopoulos says that on 13 September 2010, he learnt that ASIC records incorrectly showed Dr Kambouris as having been appointed as a director of Botanical Water Holdings on 10 September 2010 (the Form shows 1 September, but dates the part to be signed by Mr Abdou as 10 September 2010), and also learnt that the allotment of a further 990,000 in Botanical had not been recorded with ASIC.
Mr Marinopoulos said he spoke to Mr Gregory, who told him that Mr Abdou had called him and instructed him to correct the incorrect ASIC records and record the allotment of shares in accordance with the shareholders minute of 19 July 2010.
Mr Marinopoulos says that during this conversation Mr Gregory asked him for his assistance to correct the ASIC records.
Mr Marinopoulos says that on the afternoon of 21 September 2010, he again attended Mr Gregory’s office and was told by Mr Gregory that earlier in the day he had electronically filed an electronic ASIC Form 484 with ASIC showing the allotment of 990,000 shares in Botanical Water Holdings in accordance with the shareholders’ minute. Mr Gregory also told him that he needed to provide an explanation to ASIC in the form of a director’s minute to correct the incorrect recording of Dr Kambouris as a director. Mr Marinopoulos says that Mr Gregory suggested that he prepare a director’s minute for Botanical Water Holdings on the basis that a circular resolution of shareholders had not been signed by all shareholders and was thus invalid.
Mr Marinopoulos says that, in consultation with Mr Gregory, he prepared the minute, which was signed by Mr Abdou in Mr Gregory’s office at approximately 5.30pm on 21 September 2010, and produces a true copy of the minute. He says that a few minutes later, he observed Mr Gregory make an electronic filing with ASIC.
Affidavits in reply – further affidavit of Mr Gregory
Mr Gregory says that Mr Abdou did instruct him at the meeting of 10 September 2010 to make Dr Kambouris a director of Botanical Water Holdings, along with Keepafresh Holdings, Keepafresh Marketing. Mr Gregory takes issue with Mr Abdou’s claim that Mr Abdou was not present when he lodged the Form 484 at 3.47pm. Mr Gregory says that Mr Abdou, Mr Marinopoulos, Mr Papadimitriou, and Dr Kambouris were present. Mr Harle may have been in attendance.
Mr Gregory refers to the verification he signed for the Information Memorandum. He says that he was not shown that part of the Information Memorandum that included the purported shareholding.
Mr Gregory denied Mr Marinopoulos statement that he had a conversation with Mr Gregory, instructing him to correct the ASIC records and record the allotment of shares in accordance with the shareholder minute of 19 July 2010. He also denies asking Mr Marinopoulos for assistance to correct ASIC records. In Mr Gregory’s earlier affidavit he admitted lodging details of the purported share issue resolved on 19 July 2010.
Mr Gregory denies any involvement with preparing the revocation and director’s minute that was filed with ASIC on 21 September 2010, notifying ASIC of the revocation of Dr Kambouris’ appointment as a director.
Mr Gregory refers to Botanical Water Holdings frequently using his office. He says that it was quite common for Mr Marinopoulos to use his computer. I assume that Mr Gregory is seeking to infer that Mr Marinopoulos lodged the revocation from Mr Gregory’s computer in Mr Gregory’s absence.
Further affidavit of Dr Kambouris
Dr Kambouris says that Mr Harle, who he believed to be a reputable solicitor, told him that it was imperative that his current employer, AVL, had no knowledge of his shareholding in Botanical Water Holdings. He says that Mr Harle suggested that Mr Abdou become director of AGAO so that Dr Kambouris’ association with Botanical Water Holdings would be concealed from AVL and that he could later become a director.
Dr Kambouris says that he was reluctant to resign as an employee of AVL, but pressure was put on him by Mr Abdou, Mr Papadimitriou, and Mr Harle for him to resign. He says that Mr Abdou agreed to compensate him for lost income with a payment of $6,000 per month.
Dr Kambouris says that he resigned on 12 April 2010, and that after his resignation, AVL threatened legal action against him. Dr Kambouris says that as a result of those threats he gave the letter to Mr Harle. He said that Mr Harle engaged a barrister, Mark Goldblatt, to provide advice and settle correspondence.
Dr Kambouris denies that he agreed to alter the shareholding, and denies that he attended a meeting on 19 July 2010. He says that the meeting never happened. Dr Kambouris says that he flew from Melbourne to Mildura on Friday 16 July, and produces a Qantas e-ticket in confirmation. He also says that on Monday 19 July he was in Mildura, as he put his house up for an award in the HIA Central Victoria Housing Awards and on Monday 19 July the judges of that award met with him and inspected his property in Mildura. He exhibits a letter from the Events Manager of the Association. The letter does confirm that Dr Kambouris met with the judges at 11.00am on Monday 19 July. Dr Kambouris says that he remained in Mildura after the inspection.
Dr Kambouris produced a heads of agreement between himself and AJ Phoenix, under which he acknowledged that he was the owner of the intellectual property that was lodged on 17 January by Mr Moussi. The heads of agreement provide for Dr Kambouris or his nominee to hold 51% of Botanical Water Holdings, which was to be formed to exploit the invention.
Dr Kambouris denies knowledge of p 40 of the draft Information Memorandum that showed the altered share holdings. He also denies knowledge of the minutes of the meeting of 19 July.
Further affidavit of Mr Moussi
In this affidavit, Mr Moussi admits that he was not the inventor of the Botanical Water process. He says that he filed the provisional patent in response to a request by Dr Kambouris.
Mr Moussi denies that the meeting of 19 July 2010 occurred. He says that he never had a meeting at which they discussed the issue of new shares to dilute the shareholdings of AGAO and Play Australia.
Mr Abdou’s case at trial
Mr Abdou tendered his affidavit of 22 September 2011, which I have discussed above. It was admitted subject to some deletions.
Mr Abdou gave oral evidence. He spoke very quickly. He spoke in rapid bursts that often jumbled up several points. To understand his evidence, one had to “read between the lines”, so to speak. Mr Abdou was cross-examined at great length. He repeatedly sought to avoid answering questions directly, obfuscated, and equivocated. He claimed that he believed that Mr Moussi was the inventor of the invention the subject of the patent application. I do not accept that evidence. I am satisfied that he was well aware that Dr Kambouris was the inventor and was quite prepared to be party to Mr Moussi’s misleading and deceptive conduct in claiming that he invented the invention. I find that Mr Abdou’s evidence was unreliable, and I am not prepared to accept it unless supported by independent, reliable evidence.
Mr Abdou said that he was a property developer. He said that he met Dr Kambouris through John Papadimitriou, a fellow property developer. Mr Abdou said that he met Dr Kambouris and his associate Mr Moussi about a project relating to the storage of wine. Mr Abdou said that Mr Moussi and Dr Kambouris were long-time friends and business associates. Mr Abdou says that he was told about another project involving the use of water extracted out of fruit concentrate.
On 16 April 2010, Mr Moussi assigned to Botanical Water Holdings the intellectual property in the patent application filed 17 January 2010. The assignment attached the patent application in which Mr Moussi declared that he was the first and sole inventor of the subject matter for which the patent was sought. This declaration was false.
According to Mr Abdou, the change in the shareholding that led to the 30/30/30 structure was related to Dr Kambouris’ troubles with his former employer. Mr Abdou says that AVL dismissed Dr Kambouris and took legal proceedings against him. Dr Kambouris approached Mr Abdou, distressed and seeking help, in their office in Chelsea. He was concerned that he would lose his house. He informed Mr Abdou that AVL were not paying him holiday pay and that AVL had told Dr Kambouris to leave the keys to his car and go straight away.
Mr Abdou said that he offered the assistance of Mr Goldblatt, a barrister, and paid money towards his fees. Mr Abdou said that AVL let Dr Kambouris go, and Dr Kambouris said, “Look we’re all brothers here … we’re going to be equal in this and we’re not going to have one better than the other and we wanted to go 30/30/30.” It was this proposal that was ultimately reflected in the meeting of 19 July 2010.
Mr John Marinopoulos was associated with the Strategic Alliance Group. He or his company put together an information memorandum seeking to raise moneys from investors to exploit the invention. Strategic Alliance Group was paid some $250,000 for its work on the information memorandum. Mr Abdou said that they ran out of money, and that the patent has lapsed. Mr Abdou said that his company, AJ Phoenix, lent money to Botanical Water Holdings.
Mr Abdou said that Mr Gregory acted as an accountant for Botanical Water Holdings. Mr Abdou says that the form appointing Dr Kambouris a director was filed by mistake. Mr Abdou said that he was approached by Mr Marinopoulos who said that the Information Memorandum had already been handed out and asked how come Bruce Kambouris was a director.
Mr Abdou says that he went to Mr Gregory’s office and Mr Gregory agreed that he would lodge the appropriate forms with ASIC to remove Dr Kambouris as a director on the register kept by ASIC.
Mr Abdou said that Dr Kambouris was not listed as a director originally as he did not want his name associated with the company because of his concerns about his previous employer attacking him.
Mr Abdou says that he informed Dr Kambouris in a telephone conversation that Dr Kambouris’ name had been removed as a director because the Information Memorandum had gone out. Mr Abdou says that Dr Kambouris just went silent and did not complain about what had been done.
Mr Abdou gave evidence of the meeting on Sunday 18 and Monday 19 July 2010. He said the paperwork was done by Mr Gregory. Mr Abdou said that they met at about 10pm on Sunday 18 July at Mr Moussi’s apartment in Clarendon Street, Southbank. Mr Abdou said that those present were himself, John Papadimitriou, Mr Moussi, and Dr Kambouris.
Mr Abdou said they discussed the Information Memorandum and fixed the mistakes and added some extras to it “and made the resolution meeting and we wrote it down on a piece of paper. We took it to Greg the next day, Mr Greg Gregory.” Mr Abdou says that Mr Gregory was told this is what had been resolved and that they needed a resolution done for this. He said that Mr Gregory advised that they put down 1 April 2010 as when the allotment took place.
Mr Abdou elaborated on what took place at the meeting. Mr Abdou said that he had been paying Dr Kambouris $6,000 a month when he lost his job. Mr Abdou said that Dr Kambouris said, “Look, you know, your helping me out more than my brothers do and, you know, let’s all be equal partners.” Mr Abdou says that he said, “Look, you’ve got to be sure about this because we don’t know”, and Mr Abdou said the Dr Kambouris responded, “No, we’re going to make heaps of money. Even if it is only 5 per cent there’s going to be heaps of money in it”. Mr Abdou says that he said, “All right, no big deal, we’ll go 30, 30, 30”, and in his evidence Mr Abdou went on to say, “and that’s how we – so we did 30, 30, 30.”
Mr Abdou said AJ Phoenix had 60%, Dr Kambouris had 30%, Play Australia had 4%, Desa had 1%, Capital Raising had 1%, which left 4% for the employment fund for employees, including the CEO and Mr Gregory.
Mr Papadimitriou was to have a half share AJ Phoenix’s share of Botanical Water Holdings. During 2010, until 2 December 2010, Mr Papadimitriou was an undischarged bankrupt. His share of AJ Phoenix was to be held by his wife, Trudy Papadimitriou.
Did the meeting of 19 July 2010 take place?
The critical issue in this case is whether or not Dr Kambouris, Mr Moussi, Mr Abdou, and Mr Papadimitriou met at Mr Moussi’s apartment on the night of 18-19 July 2010 and agreed to alter the shareholding. There is no dispute as to what the shareholding was prior to that meeting. Dr Kambouris says the meeting did not take place and no such alteration was agreed. Mr Abdou says that it did.
The onus rests on Dr Kambouris to establish the shareholding was not altered, as he seeks the declaration to that effect.
I have not had the benefit of hearing Dr Kambouris give evidence. He chose not to make himself available for cross-examination, or to give further evidence in chief. He sought to rely on his affidavits.
I did have the benefit of seeing Mr Abdou. As indicated above, his evidence did not fill me with confidence as to its accuracy. His answers were vague. He was evasive. I do not approach his evidence with any great confidence.
Dr Kambouris did not give oral evidence. My confidence in his evidence has been undermined by his falsely representing that he was not the inventor of the process the subject of the patent application, but that Mr Moussi was. Mr Moussi is also a person who does not inspire me with confidence. He made a false declaration that he was the inventor of the process the subject of the patent application. Mr Papadimitriou was an undischarged bankrupt. Mr Harle was a solicitor who had lost his practising certificate.
On the critical issue of whether or not Dr Kambouris attended a meeting in Mr Moussi’s apartment on the evening of 18 July and the morning of 19 July 2010, I do not accept Mr Abdou’s evidence.
There are aspects of his evidence that lead me to doubt its accuracy. Further, there is evidence adduced by Dr Kambouris that support his denial that such a meeting took place.
On Friday 16 July 2010, Dr Kambouris deposed that he returned to Mildura from Melbourne. He produced an e-ticket with Qantas airways that indicates he had a ticket from Melbourne to Mildura arriving at 4.50pm on Friday afternoon.
Mr Abdou says the relevant meeting began at about 10pm on the evening of Sunday 18 July 2010. Mr Abdou says that the meeting concluded at about 1.00am on Monday 19 July 2010.
Dr Kambouris has produced a letter from Emma Payne, the Event Manager for the Housing Industry Association Ltd, that says that the judges of the HIA Central Victoria Awards met with Dr Kambouris at his home at 259 Cureton Avenue on Monday 19 July 2010 at approximately 11.00am to inspect the site, as it was entered into the HIA Central Victoria Housing Awards competition. This document was hearsay but no objection was made as to its admission. The hearsay nature goes to its weight, in any event.
Mr Abdou has produced a resolution of shareholders held on 19 July 2010 at Mr Moussi’s apartment. The resolution is dated Tuesday 20 July 2010.
In Mr Abdou’s affidavit of 22 September 2011, he says that he contacted Mr Harle and asked him to prepare a suitable minute and Mr Harle produced the resolution. On the other hand, in Mr Abdou’s oral evidence in chief he said the paperwork on the 19 July meeting was drawn up by Mr Gregory. He also said that the resolution at the meeting was written down on a piece of paper and “we took it to Greg the next day, Mr Greg Gregory.”
The handwritten piece of paper was not produced. More importantly, the evidence about Mr Gregory does not sit easily with Mr Abdou’s affidavit, where he said that contacted Mr Harle to prepare a suitable minute.
Mr Abdou could have called his associate, Mr Papadimitriou, who was supposedly at the meeting on 18-19 July 2010, but Mr Abdou did not do so.
Mr Moussi deposed that no such meeting took place. I place little weight on his evidence. Mrs Kambouris deposed that on Monday 19 July 2010, she was in Mildura with her husband.
I am satisfied that the original shareholdings were as set out above. There is no dispute about that. I am not satisfied that the shareholding was altered.
Accordingly, I am satisfied on the balance of probabilities that the shareholding was not altered at a meeting held on 18-19 July 2010.
Dr Kambouris as a director
I am not satisfied that Dr Kambouris was properly appointed a director of Botanical Water Holdings on 10 September 2010. The documents produced by Mr Marinopoulos indicates that he was appointed a director of Botanical Water Marketing Pty Ltd, Keepafresh Holdings Pty Ltd, and Keepafresh Marketing Pty Ltd on 10 September 2010. No such document was produced in relation to Botanical Water Holdings. Dr Kambouris was not recognised as a director of Botanical Water Holdings in the draft Information Memorandum exhibited to Mr Marinopoulos’s affidavit. He was described as a consultant. Mr Marinopoulos produces a minute that appoints Dr Kambouris as an ASIC agent on 10 September 2010. The minute makes no reference to him being appointed a director of Botanical Water Holdings.
Dr Kambouris and Mr Moussi did not dispute that the 10 September 2010 meeting was held to complete the Information Memorandum of Botanical Water Holdings and other documents relating to Botanical Water Marketing Pty Ltd, Keepafresh Holdings Pty Ltd, and Keepafresh Marketing Pty Ltd. It seems most unlikely that Dr Kambouris would be appointed to the board of Botanical Water Holdings when he had to gone to so much trouble to hide his involvement with Botanical Water Holdings and to keep secret who was the true inventor of the process the subject of the patent application, and had agreed to be described to the public as the “Consulting Chemist to Botanical Water Holdings Pty Ltd”.
Orders
The plaintiffs have been successful in part of their application. They have failed on the directorship issue. They have sought the assistance of the Court to rectify the dealings between them and their associates that were designed, in part, to mislead the investing public and Dr Kambouris’ previous employer. In those circumstances, I am not inclined to make any order for costs.
I propose to order as follows:
1. I declare that as at 10 September 2011, the share holding of Botanical Water Holdings was as follows:
(a) 40 of 1000 issued ordinary shares were held by Play Australia Pty Ltd;
(b) 450 of 1000 issued ordinary shares were held by AJ Phoenix Pty Ltd;
(c) 510 of 1000 issued ordinary shares were held by AGAO Nominees Pty Ltd.
2. I order that ASIC rectify its registers accordingly.[1]
[1]See generally Re MIG Property Services Pty Ltd (No 2) [2012] VSC 606.
3. I otherwise dismiss the application.
4. No order as to costs.
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