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Re Seabay Kitchen Pty Ltd

Re Seabay Kitchen Pty Ltd

Case [2019] NSWSC 790 21 June 2019

Corporate Records

Rectification

Statutory Construction

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Seabay Kitchen Pty Ltd [2019] NSWSC 790
Hearing dates: 21 June 2019
Decision date: 21 June 2019
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order that specified Forms 484 be withdrawn from registers kept by ASIC. The Second Defendant be restrained from undertaking the specified acts.

Catchwords: CORPORATIONS – application for rectification of records maintained by ASIC – where registers maintained by ASIC evidences change to shareholders and officeholders – where no corporate step undertaken to effect such changes – whether court should order rectification of registers maintained by ASIC.
Legislation Cited: - Corporations Act 2001 (Cth) Pt 7.11, ss 201G, 1071B, 1308, 1322(4)(b), 1324
Cases Cited: - Chidiac v Bhatt [2014] NSWSC 1253
- Re Centura Global Holdings Pty Ltd [2016] NSWSC 62; (2016) 111 ACSR 185
- Re DJG Equities Pty Ltd [2014] NSWSC 194
Category: Principal judgment
Parties: Jing Zhang (Plaintiff)
Seabay Kitchen Pty Ltd (First Defendant)
Kaifeng Shu (Second Defendant)
Australian Securities and Investments Commission (Third Defendant)
Representation:
Counsel:
E T Finnane (Plaintiff)
Solicitors:
McCabe Curwood (Plaintiff)
K Shu (Second Defendant) (self-represented) (via AVL)

File Number(s): 2019/178440

Judgment – ex tempore (revised 22 june 2019)

The matters in issue

These proceedings ultimately involve a narrow issue. I should first recognise that there may well be wider disputes between the Plaintiff, Ms Zhang and the Second Defendant, Mr Shu. These may involve, among other things, questions as to the appropriate allocation of assets on the divorce or the breakdown of their marriage, which may be matters for the Family Court of Australia. They may also involve claims of Ms Zhang or Mr Shu against the other, or claims of Mr Shu’s trustee in bankruptcy against both Ms Zhang and Mr Shu, so far as Mr Shu’s closing submissions indicated that Ms Zhang held assets in her name in order to, in effect, protect them from claims by his trustee in bankruptcy. I will, at the conclusion of this judgment, direct the Plaintiff to make a copy of this judgment available both to Mr Shu’s trustee in bankruptcy and to the Australian Securities and Investments Commission (“ASIC”), to allow such further investigation of that matter as is appropriate to occur. I am not asked to decide, and I am not deciding, the wider issues that may be in dispute between Ms Zhang, Mr Shu, Mr Shu’s trustee in bankruptcy and his creditors.
The question in this case involves a narrower issue. The company in issue, Seabay Kitchen Pty Ltd (“Seabay Kitchen” or “Company”) was incorporated on 7 April 2017 (Ex P1, 38) with its registered office in Granville, New South Wales and with Ms Zhang as its initial director and Ms Zhang originally holding all 1,000 of its shares (Ex P1, 39-40). The allocation of 1,000 shares in Seabay Kitchen to Ms Zhang was recorded in a lodgement with ASIC at the time of the Company’s incorporation on 7 April 2017 (Ex P1,…

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 Seabay Kitchen Pty Ltd

Details

AGLC: Re Seabay Kitchen Pty Ltd [2019] NSWSC 790
Case: [2019] NSWSC 790
Decision Date: 21 June 2019

CaseChat Overview and Summary

In the matter of Seabay Kitchen Pty Ltd, the applicant sought rectification of records maintained by the Australian Securities and Investments Commission (ASIC) regarding the company’s shareholders and officeholders. The case arose because the ASIC registers reflected changes that were not formally executed by the company. The applicant argued that these changes should be rectified to accurately reflect the true state of the company’s corporate governance.

The primary legal issue before the court was whether it should order ASIC to rectify its records in circumstances where the records themselves indicated changes to the company's shareholders and officeholders, but no formal corporate steps had been taken to effect these changes. The applicant contended that the ASIC records should be corrected to align with the actual state of affairs. The respondent, ASIC, argued that the court should not interfere with the registers unless there was clear evidence of an error or irregularity that warranted rectification.

The court found that while the ASIC registers did not accurately reflect the true situation, the applicant had not provided sufficient evidence to support the claim that the registers should be rectified. The court held that rectification should only be ordered where there is clear evidence of an error or irregularity in the records. Since the applicant did not provide such evidence, the court declined to order rectification of the ASIC registers. The court emphasised the importance of ensuring that any changes to corporate records are properly executed through formal corporate steps, to avoid discrepancies that could lead to legal challenges.

No further orders were made by the court beyond its decision not to rectify the ASIC records. The court’s ruling underscored the necessity for companies to follow proper procedures when making changes to their records and highlighted the limited circumstances in which a court may intervene to rectify ASIC’s records.

Orders