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Re Mogul Stud Pty Ltd

Re Mogul Stud Pty Ltd

Case [2012] NSWSC 1639 12 November 2012

Corporations Act 2001 (Cth) s 175(1)

Discretionary Power

Rectification of Register

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Mogul Stud Pty Limited [2012] NSWSC 1639
Hearing dates: 12 November 2012
Decision date: 12 November 2012
Jurisdiction: Equity Division - Corporations List
Before: Black J
Decision:
Orders made for rectification of share register.

Catchwords: CORPORATIONS - Application for rectification of share register under Corporations Act 2001 (Cth) s 175(1) - Discretionary character of power to order rectification of the register - Whether position as recorded in company's register records the intentions of the parties
Legislation Cited: - Corporations Act 2001 (Cth) s 175(1)
Cases Cited: - Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603
- Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1
- Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1966) 20 ACSR 553; (1996) 14 ACLC 1089
Category: Principal judgment
Parties: Mogul Stud Pty Limited (Plaintiff)
Barney Richard Arthur Scheinberg (First Defendant)
Deborah Catherine Susan Redelman (Second Defendant)
George Jim Leslie Jacobs (Third Defendant)
Jolistare Pty Limited (Fourth Defendant)
Redbell Nominees Pty Limited (Fifth Defendant)
Gisella Scheinberg (Sixth Defendant)
Representation: Counsel:
A.S. Bell SC/D.F.C. Thomas (Plaintiff)
Solicitors:
Johnson Winter Slattery (Plaintiff)

File Number(s): 2012/296610

Judgment - Ex tempore

By originating process filed 24 September 2012 the plaintiff, Mogul Stud Pty Limited ("Company") applies for rectification of the share register kept by Mogul Stud such that the number of "B" class shares recorded as having been issued to the third defendant, Dr George Jacobs, on 26 June 1980 be amended from 200 to 100.

The application is supported by each of the Company's individual shareholders and its directors and each of them has given evidence. A former director and current shareholder, Ms Gisella Scheinberg, has also given evidence. The Court has been assisted by comprehensive submissions by counsel for the Company, Dr Bell SC and Mr Thomas.

In summary, 100 class B shares, carrying dividend rights, were issued to Mr and Mrs Scheinberg as trustee for two of their then minor children, Mr Barney Scheinberg and Ms Deborah Redelman in 1967. At the same time, shares described as "preference shares" were issued to Dr Jacobs. Subsequent share issues took place, including the additional issue of further B class shares to Dr Jacobs in June 1980 and to Mr Scheinberg and Ms Redelman in January 1981. On 1 July 1982, the 100 preference shares issued to Dr Jacobs in 1967 converted to B class shares. The effect of these series of transactions was that, for reasons that are not now understood, Dr Jacobs came to hold 300 B class shares in the Company while each of Mr Scheinberg and Ms Redelman held 200 B class preference shares. The possibility of error in this process is apparent, given the period of time over which it occurred and the fact that it occurred in several steps.

Ms Gisella Scheinberg gives evidence of conversations with her late husband that contemplated that a farm that is held through…

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.

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Details

AGLC: Re Mogul Stud Pty Ltd [2012] NSWSC 1639
Case: [2012] NSWSC 1639
Decision Date: 12 November 2012

CaseChat Overview and Summary

Mogul Stud Pty Ltd was involved in an application under section 175(1) of the Corporations Act 2001 (Cth), seeking rectification of its share register. The dispute arose from a disagreement about whether the positions as recorded in the company's register accurately reflected the intentions of the parties. The court was tasked with deciding whether the power to order rectification was discretionary and, if so, whether it should be exercised in this case.

The primary legal issue before the court was the discretionary nature of the power to order rectification of the share register. The court had to consider whether this power was indeed discretionary and, if so, what factors should guide its exercise. Specifically, the court needed to determine whether the positions as recorded in the company's register truly reflected the intentions of the parties involved. This involved a careful analysis of the evidence presented and the principles governing rectification of corporate records.

In addressing these issues, the court found that the power to order rectification was indeed discretionary. However, the court exercised this power judiciously, taking into account the intentions of the parties as evidenced by the available documentation and testimonies. The court concluded that the recorded positions did not accurately reflect the true intentions of the parties and, therefore, ordered the rectification of the share register accordingly. This decision was based on a comprehensive evaluation of the evidence and the applicable legal principles.

The final orders of the court mandated the rectification of the share register of Mogul Stud Pty Ltd to reflect the true intentions of the parties. This included specific directions on how the register should be amended to align with the court's determination. The court's decision was aimed at ensuring that the company's records accurately represented the agreements and understandings between the parties involved.

Orders