Shuren & Fang (No 2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Shuren & Fang (No 2) [2023] FedCFamC1F 880

File number MLC 3815 of 2023
Judgment of WILSON J
Date of judgment 12 October 2023
Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – husband’s application to restrain wife from convening an extraordinary general meeting of shareholders for the removal of the husband as a director of B Pty Ltd – other applications also brought by husband including an order restraining wife from entering B Pty Ltd’s premises – applications dismissed.
Legislation

Corporations Act 2001 (Cth)

Family Law Act 1975 (Cth) s 79

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 3

Cases cited

ASIC v Healey & Ors [2011] FCA 717

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199

Brayton & Brayton [2021] FedCFamC1F 337

Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148

Commonwealth Bank of Australia v Friedrich and Ors (1991) 9 ACLC 946

Remrose Pty Ltd v Allsilver Holdings Pty Ltd [2005] WASC 251

Shuren & Fang [2023] FedCFamC1F 712

Statewide Tobacco Services v Morley (1990) 2 ASCR 405

Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429

Division Division 1 First Instance
Number of paragraphs 39
Date of last submission/s 12 October 2023
Date of hearing 11 October 2023
Place Parramatta
Counsel for the Applicant: Mr L. Glick KC
Solicitor for the Applicant: Australia Legal Advisory Centre
Counsel for the First Respondent: Mr A. Strahan KC, Mr R. Boadle
Solicitor for the First Respondent: Aston Legal Group
Solicitor for the Second Respondent: Did not participate
Solicitor for the Third Respondent: Did not participate

ORDERS

MLC 3815 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN

MS SHUREN

Applicant
AND

MR FANG

First Respondent

C PTY LTD

Second Respondent

B PTY LTD

Third Respondent

ORDER MADE BY

WILSON J

DATE OF ORDER

12 OCTOBER 2023

THE COURT ORDERS THAT –

1.All applications made in the husband’s amended application in a proceeding filed 27 September 2023 and heard by me on 11 October 2023 are hereby dismissed.

2.The orders made by me on 18 September 2023 apply with full force and effect including the order for the commencement of the trial of this proceeding in February 2024.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED…

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Details
Case
[2023] FedCFamC1F 880
Decision Date

CaseChat Overview and Summary

The case Shuren & Fang (No 2) involves a dispute between a husband and wife, both of whom are directors of B Pty Ltd. The husband filed an application in the Major Complex Financial Proceedings List seeking to prevent his wife from convening an extraordinary general meeting of shareholders with the intent to remove him as a director of B Pty Ltd. The husband also sought other orders, including one to prevent his wife from entering B Pty Ltd’s premises. The court dismissed all of the husband's applications. The husband and wife were represented by experienced counsel in company law. The court considered the legal issues regarding the necessity and appropriateness of the proposed restraints on the wife's actions in relation to the company. The court found that the husband had not demonstrated that the orders were necessary to preserve the status quo, relevant to the property adjustment application, or that they represented an irreparable injury. The court also noted that shareholders in a general meeting should decide on the composition of the board, and that the balance of convenience did not favour granting the requested restraints.

The court dismissed the husband's amended application, highlighting that the shareholders should be free to resolve internal matters regarding the board’s composition, provided the meeting is validly constituted. The court also found that the husband had not presented sufficient evidence to support his claims of potential oppressive conduct or financial instability. The court's decision underscored the importance of allowing the shareholders to exercise their rights in accordance with the company's constitution and applicable law. The dismissal of the husband's applications ensures that the proceedings related to the property adjustment and the extraordinary general meeting can proceed without further impediments.

Orders

Orders of the court

MLC 3815 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN

MS SHUREN

Applicant

AND

MR FANG

First Respondent

C PTY LTD

Second Respondent

B PTY LTD

Third Respondent

ORDER MADE BY

WILSON J

DATE OF ORDER

12 OCTOBER 2023

THE COURT ORDERS THAT –

1. All applications made in the husband’s amended application in a proceeding filed 27 September 2023 and heard by me on 11 October 2023 are hereby dismissed.

2. The orders made by me on 18 September 2023 apply with full force and effect including the order for the commencement of the trial of this proceeding in February 2024.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

This proceeding is in the Major Complex Financial Proceedings List ("MCFPL"). Judicial flexibility to hear and determine urgent applications in urgent circumstances is one of the hallmarks of the success of the MCFPL. The wife was represented by Mr Glick KC and the husband by Mr Strahan KC, both experts in the field of company law. I acknowledge with gratitude their contribution to the determination of this urgent application. For reasons that now follow, I dismiss the husband's amended application. BACKGROUND To better understand the applications brought, it is necessary to put the proceeding in context, some of which is recorded in my decision, the anonymous name for which is Shuren & Fang.[1] Abbreviations follow the judgment earlier handed down. [1] [2023] FedCFamC1F 712. The husband and wife are directors of B Pty Ltd. A company owned and controlled by the husband holds a significant shareholding in B Pty Ltd, as does a company owned and controlled by the wife. Other shareholders own shares in B Pty Ltd. The wife was purportedly removed as a director of B Pty Ltd earlier this year. I declared that her purported removal was invalid and that she was to be restored to the office of director. The husband and wife, some years ago, agreed to orders being made under s.79 of the Family Law Act, allegedly altering their property interests. The wife brought an application under s.79A of the Family Law Act pursuant to which she seeks orders setting aside those consent orders. The trial of that proceeding is fixed for February 2024, which I originally fixed by orders made by me on 18 September 2023 but later refixed the trial date. In paragraph 15 of the orders made on 18 September 2023, I ordered the husband's application in a proceeding filed 15 September 2023 to be heard and determined on 17 October 2023 – that is to say, next Tuesday. The husband's application in a proceeding filed 15 September 2023 sought two orders. The first was an order restraining the wife from interfering in or seeking to interfere in the day‑to‑day management of B Pty Ltd. The second order sought was that the wife be required to give the husband at least two business days' notice before attending B Pty Ltd 's offices. Prior to 2.15pm on Wednesday, 11 October 2023, in accordance with the orders made on 18 September 2023, the husband's application filed 15 September 2023 had been fixed for hearing and determination on Tuesday 17 October 2023. An intervention order is presently operative against the husband. The IVO was made in mid‑2023. It previously forbad the husband from communicating with the wife or from approaching or remaining within five metres of the wife. An application to vary the IVO was brought by the wife on 28 September 2023. That variation application is returnable before a Magistrates' Court in October 2023. As matters presently stand, in October an extraordinary general meeting of shareholders of B Pty Ltd will be held at 11:00am. The wife has given notice of the holding of that extraordinary general meeting to the husband. She requires him to be present at that meeting and wanted her IVO varied to permit the husband to attend the B Pty Ltd shareholder’s meeting. The agenda for that meeting includes proposing and if thought fit passing resolutions –(a)for the removal of the husband as a director of B Pty Ltd; and(b)for the appointment of Ms P and Ms N as the directors of B Pty Ltd.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Mr Glick KC submitted that the law presently requires reasonable notice to be given, meaning that a director cannot demand to be admitted to the company premises outside normal business hours. CONSIDERATION The application in paragraph 1 of the husband’s amended application in a case has been achieved by my hearing this application prior to 16 October 2023. I refuse to make an order for the joinder of K Pty Ltd. No basis was given for such an order. It was not shown that in accordance with Rule 3.03(4) of the rules of the court, K Pty Ltd is a necessary party and therefore should be joined. I dismiss paragraph 2 of the husband’s amended application in a proceeding. So far as paragraph 3 was concerned, several matters call for narration. They include the following – (a)no evidence was put before me to the effect that either order sought is a necessary interlocutory order so as to preserve some semblance of status quo prior to determining the ultimate issue to which paragraphs 3(a) and (b) are directed; (b)a property adjustment order is sought so precisely how an order preventing the removal of the husband as a director or an order preventing the appointment of Ms P or Ms N was relevant to that s.79 application was not said;(c)the husband did not establish that orders preventing his removal from the board of B Pty Ltd or that orders for the appointment of Ms P and Ms N went to a serious issue to be tried in the proceeding, that those orders if made represented an irreparable injury incapable of redress by damages or that the orders sought in paragraph 3 were orders that the balance of convenience favoured; (d)shareholders in general meeting should decide who makes up the board of B Pty Ltd; (e)no suggestion has been made that some defect exists in the notice of the meeting to be held on 16 October 2023 or that some procedural irregularity otherwise exists; (f)the members of a company in general meeting should be free to resolve all internal matters referable to the composition of the board of a company, so long as any such meeting is validly constituted and nothing was here said to the effect that the meeting to be held on 16 October 2023 raises any issues that may constitute invalidity; (g)the asserted reason why the meeting should be enjoined, namely that the lender will or may collapse the financial accommodation it presently extends to B Pty Ltd was not supported by the evidence; (h)the husband’s procurement of B Pty Ltd to pay Z Pty Ltd some management fee is properly the subject of agitation and debate at an extraordinary general meeting of members, as proposed; and (i)the balance of convenience does not favour the granting of the restraints sought in paragraph 3 of the husband’s amended application in a proceeding. In addition, whatever may have been foreshadowed about the husband pursuing remedies in relation to oppressive conduct has not seen the light of day so I am not presently inclined to accord his assertions that he has been, is being or will be oppressed any credence in the absence of a court document in which he puts forward any such allegation of oppression, providing full particulars thereof.