Re W.W Property Development Pty Ltd (in liq) - [2022] VSC 606

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2022 02945

IN THE MATTER of W.W Property Development Pty Ltd (In Liquidation) (ACN 162 433 829)

VLADO MEGA	First Plaintiff
ZUSKA MEGA	Second Plaintiff
v
W.W PROPERTY DEVELOPMENT PTY LTD (in liquidation) (ACN 162 433 829)	Defendant

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JUDGE:	GARDE J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 August 2022
DATE OF JUDGMENT:	12 October 2022
CASE MAY BE CITED AS:	Re W.W Property Development Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2022] VSC 606

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CORPORATIONS – Application for leave to proceed with an existing proceeding against a corporation in liquidation – Principles and relevant considerations relating to the grant of leave – Proceeding well-advanced – Complex legal and factual issues – Other parties with similar interests – Lack of funding available to the liquidators – Corporations Act 2001 (Cth) ss 471B, 500(2).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Herskope	Aspire Lawyers
For the Defendant	Mr A Segal	Maddocks

HIS HONOUR:

Introduction

Vlado and Zuska Mega apply for leave under s 500(2) of the Corporations Act 2001 (Cth) (‘Act’) to proceed against the defendant, W.W Property Development Pty Ltd (in liq) (‘WWPD’), in proceeding S ECI 2020 00450 (‘2020 proceeding’).

On 14 July 2022, WWPD passed a resolution for a creditors’ voluntary winding up. David Vasudevan and Innis Cull of Pitcher Partners were appointed as liquidators of WWPD. Mr and Mrs Mega require leave to proceed against WWPD in the 2020 proceeding.

The application is supported by the affidavit of Shayne Bedford filed 3 August 2022.

Background

In the 2020 proceeding, Mr and Mrs Mega seek to recover the sum of $498,437.05, together with interest and costs, from WWPD and others. They claim for equitable contribution on the basis that the defendants paid less than their share of the liability under guarantees given by eight guarantors in connection with a loan facility advanced by the Commonwealth Bank of Australia to Mega Homes Pty Ltd (ACN 063 797 473) (‘Mega Homes’).

By a share sale agreement dated 12 May 2016, Mr and Mrs Mega sold 50% of the total shares in Mega Homes to WWPD for a purchase price of $15 million. At this time, WWPD had two directors, Jonathan Wang and Ping Wang (also known as Sunny Wang). Moray & Agnew, solicitors, acted for WWPD.

Acting on the instructions of Sunny Wang, WWPD now alleges that Jonathan Wang entered into the share sale agreement, and a related merger and shareholders agreement, without WWPD’s authority.

Mr and Mrs Mega transferred their shares in Mega Homes to WWPD in return for the payment of $6,501,414.50. WWPD and Bo Jiang counterclaim that these funds included funds provided by WWPD ($1,000,000), Bo Jiang ($3,321,414.50) and Holden Rd Development Pty Ltd ($1,500,000). Moray & Agnew paid the amount of $3,321,414.50 to Mr and Mrs Mega on the instructions of Jonathan Wang.

In the 2020 proceeding, WWPD and Mr Jiang counterclaim that the purchase price…

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

Case: [2022] VSC 606
Decision Date: 12 October 2022

CaseChat Overview and Summary

The case of Re W.W Property Development Pty Ltd (in liq) involved an application for leave to proceed with an existing proceeding against a corporation in liquidation. The matter was before the court to determine the principles and relevant considerations for granting leave in such circumstances. The applicant sought to continue a proceeding against the company in liquidation, which had complex legal and factual issues and was well-advanced. The case also involved other parties with similar interests, and there was a concern about the lack of funding available to the liquidators.

The primary legal issues before the court were whether the applicant had a sufficient interest in the proceeding, the merits of the proceeding, and whether the grant of leave would be in the interests of justice. The court needed to weigh the applicant's interest against the interests of other parties and the availability of funding for the liquidators. The court also had to consider the principles established in previous cases regarding the grant of leave to proceed against a corporation in liquidation.

The court found that the applicant had a sufficient interest in the proceeding, and the proceeding had complex legal and factual issues that warranted further exploration. The court also found that the grant of leave would be in the interests of justice, as the proceeding was well-advanced, and the applicant had a legitimate claim. The court noted that other parties with similar interests were also involved and that there was a lack of funding available to the liquidators. However, the court concluded that the applicant's interest in the proceeding and the merits of the proceeding outweighed these considerations. The court granted the application for leave to proceed with the existing proceeding against the corporation in liquidation.

The court ordered that the applicant be granted leave to proceed with the existing proceeding against the corporation in liquidation, subject to certain conditions. The court also ordered that the liquidators be notified of the grant of leave and that they take steps to ensure that the interests of all parties are protected. The court emphasised that the grant of leave was not a determination on the merits of the proceeding and that the applicant would need to prove their case in the proceeding.

Orders