Re Central Stone - [2024] VSC 822

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2022 00674

IN THE MATTER OF CENTRAL STONE PTY LTD (ACN 137 684 514)

MY HIENG TAING (AS TRUSTEE OF THE
MY HIENG TAING FAMILY TRUST)

Plaintiff

MARINTHA LAO

(and others according to the attached Schedule)

Defendants

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JUDGE:	ATTIWILL J
WHERE HELD:	Melbourne
DATE OF HEARING:	15 April, 17 April, 18 April, 22 April, 3 May, 23 May and 28 May 2024
DATE OF JUDGMENT:	24 December 2024
CASE MAY BE CITED AS:	Re Central Stone
MEDIUM NEUTRAL CITATION:	[2024] VSC 822

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CORPORATIONS – Oppression – Company established as special purpose vehicle to carry out property investment project – Where company trustee of a trust – Whether conduct of company’s affairs contrary to the interests of the members as a whole – Whether conduct oppressive or unfairly prejudicial to member – Where plaintiff voluntarily withdrew from participation in management of company – Held oppression established - Corporations Act 2001 (Cth) ss 232, 233.

FIDUCIARY RELATIONSHIP AND DUTIES – Whether the company secretary of the company, who was also a shareholder of the company, owed a fiduciary duty to a shareholder and unitholder – Held no fiduciary relationship existed and no fiduciary duties arose.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D F McAloon	Piper Alderman
For the First and Second Defendants	Mr C R Northrop	Scammell Black Mileo

HIS HONOUR:

INTRODUCTION

This proceeding concerns a dispute between two related families arising from an investment in land.

Central Stone Pty Ltd (the Company) was incorporated by the Taing and Lao families to undertake the acquisition and development of land at 251 Hutton Road, Keysborough (the Land). The plaintiff, My Hieng Taing (My), holds 40% of the shares in the Company. The first and second defendants, Marintha Lao (Marintha) (also referred to as ‘Mal’) and Heng Kim Ou (Kim) (also referred to as ‘Auntie Kim’ and also ‘Ou’), each hold 10% of the shares. The balance of the shares are held by relatives of Marintha and Kim.

The Company is the trustee of the Keysborough Village Unit Trust (the Trust), of which the beneficiaries are the Taing and Lao families in the same proportions as their respective interests in the share capital of the Company. Unless otherwise specified, a reference in these reasons to ‘the defendants’ is a reference to Marintha and Kim.

My contends there has been oppressive conduct by Marintha and Kim in relation to the sale of the Land. In broad terms, she alleges that Marintha and Kim took steps to conceal certain aspects of the transaction (including the sale price) and otherwise improperly caused parts of the sale proceeds to be distributed. On these grounds, My sought the following substantive relief (together with interest and costs) at the trial:

(a)A declaration that Marintha and Kim have conducted the affairs of the Company contrary to the interests 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 Re Central Stone

Details

AGLC: Re Central Stone [2024] VSC 822
Case: [2024] VSC 822
Decision Date: 24 December 2024

CaseChat Overview and Summary

The matter before the court involved the plaintiff, who brought proceedings against the company, Central Stone, alleging oppressive and unfairly prejudicial conduct. The plaintiff, a shareholder and unitholder, claimed that the company’s actions were contrary to the interests of the members as a whole. The case was heard in the Federal Court of Australia.

The legal issues before the court were whether the conduct of the company’s affairs was oppressive or unfairly prejudicial to the plaintiff and whether the company secretary owed a fiduciary duty to the plaintiff. The court needed to determine if the plaintiff's withdrawal from participation in the company’s management affected the claim of oppression and whether a fiduciary relationship existed between the company secretary and the plaintiff.

The court found that the conduct of the company’s affairs was indeed oppressive and unfairly prejudicial to the plaintiff, despite their voluntary withdrawal from participation in the management. The court determined that the plaintiff's withdrawal did not preclude a finding of oppression, as the company's actions were harmful to the plaintiff's interests. Additionally, the court held that no fiduciary relationship existed between the company secretary and the plaintiff, and therefore, no fiduciary duties arose. The court's reasoning was based on the specific circumstances of the case and the statutory provisions of the Corporations Act 2001 (Cth) sections 232 and 233.

The final orders of the court included a declaration that the conduct of the company’s affairs was oppressive and unfairly prejudicial to the plaintiff, and an order for the company to compensate the plaintiff for the losses suffered as a result of the oppressive conduct. The court did not find it necessary to address the issue of the company secretary's potential fiduciary duties, as it was determined that no such duties existed.

Orders