Smart EV Solutions Pty Ltd v Guy (No 2)

Case [2024] FCA 1102

FEDERAL COURT OF AUSTRALIA

Smart EV Solutions Pty Ltd v Guy (No 2) [2024] FCA 1102

File number: QUD 261 of 2023
Judgment of: DERRINGTON J
Date of judgment: 5 September 2024
Date of publication of reasons: 20 September 2024
Catchwords: CORPORATIONS – application by cross-claimants for leave to bring proceedings on behalf of two corporate cross-respondents under ss 236 and 237 of the Corporations Act 2001 (Cth) – where several difficulties identifiable in amended statement of cross-claim – where cross-claim does not seek final relief – where claims are not made “on behalf of” the companies and will not inure to their benefit – application bound to fail and dismissed
Legislation:

Corporations Act 2001 (Cth)

Federal Court Rules 2011 (Cth)
Cases cited:

Ao Qing Investment Pty Ltd v 52 Lord St East Perth Pty Ltd [2022] FCA 743

In the matter of Fishinthenet Investments Pty Ltd and Coastal Waters Seafood Pty Ltd [2014] NSWSC 260

Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319

Oates v Consolidated Capital Services Pty Ltd (2009) 76 NSWLR 69

Power v Ekstein (2010) 77 ACSR 302

Re Rothwells Ltd [1990] 2 Qd R 181

Re Scobie; Ex parte Commissioner of Taxation (1995) 59 FCR 177

Smart EV Solutions Pty Ltd v Guy [2023] FCA 1580
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 51
Date of hearing: 5 September 2024
Counsel for the Applicants and the First and Second Cross-Respondents: Mr F Di Lizia
Solicitor for the Applicants and the First and Second Cross-Respondents: CDG Law
Solicitor for the Respondents and the Cross-Claimants: Mr E Jordaan of Taylor Rose
Counsel for the Third Cross-Respondent: The Third Cross-Respondent did not appear
Counsel for the Fourth Cross-Respondent: The Fourth Cross-Respondent did not appear
Counsel for the Fifth Cross-Respondent: The Fifth Cross-Respondent appeared in person

ORDERS

QUD 261 of 2023
BETWEEN:

SMART EV SOLUTIONS PTY LTD ACN 650 654 916

First Applicant

SMART GRID INVESTMENTS PTY LTD ACN 640 664 190

Second Applicant
AND:

PAUL GRAEME GUY

First Respondent

CHARGE HUB PTY LTD ACN 664 115 780

Second Respondent
AND BETWEEN:

PAUL GRAEME GUY (and others named in the Schedule)

First Cross-Claimant
AND:

SMART EV SOLUTIONS PTY LTD ACN 650 654 916 (and others named in the Schedule)

First Cross-Respondent

ORDER MADE BY:

DERRINGTON J

DATE OF ORDER:

5 SEPTEMBER 2024

THE COURT ORDERS THAT:

1.On the application filed on 29 July 2024:

(a)pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01(1)(a) of the Federal Court Rules 2011 (Cth):

(i)the first cross-respondent, Smart EV Solutions Pty Ltd, have judgment on the Amended Notice of Cross-Claim as against the cross-claimants

(ii)the Amended Cross-Claim filed on 11 June 2024 be otherwise dismissed as against the first cross-respondent, Smart EV Solutions Pty Ltd;

(b)the cross-claimants pay the first cross-respondent’s costs of the cross-claim to be taxed or agreed.

2.On the interlocutory application filed on 2 September 2024:

(a)the…

Continue reading Smart EV Solutions Pty Ltd v Guy (No 2)

Sign in free to access the full text

Details
AGLC
Smart EV Solutions Pty Ltd v Guy (No 2) [2024] FCA 1102
Case
[2024] FCA 1102
Decision Date

CaseChat Overview and Summary

The case before the Court involves an application by Smart EV Solutions Pty Ltd and Smart Grid Investments against Guy, seeking various orders including summary judgment and to strike out parts of an amended cross-claim. Additionally, the cross-claimants, who are also parties to the dispute, have sought leave to bring derivative claims on behalf of Smart EV Solutions Pty Ltd and Smart Grid Investments under sections 236 and 237 of the Corporations Act 2001 (Cth). The central issue before the Court was whether the cross-claimants should be granted leave to bring derivative claims on behalf of the companies. The Court considered whether the claims were made "on behalf of" the companies and would inure to their benefit, as required by the Corporations Act.

The Court found that the cross-claim did not seek final relief and was not made on behalf of the companies, as it would not result in a benefit to them. The Court observed several difficulties with the amended statement of cross-claim, including that the claims were not made on behalf of the companies and would not inure to their benefit. Consequently, the Court determined that the application for leave to bring derivative claims must fail. The Court dismissed the application and ordered that the cross-claimants pay the costs of the application.

The Court further directed that the cross-claimants must provide any proposed amended notice of cross-claim and accompanying statement of claim to the cross-respondents by a specified date, and the cross-respondents must indicate whether they agree to or oppose the granting of leave to file by another specified date. If the cross-respondents oppose the granting of leave, a hearing will be scheduled to determine whether the cross-claimants should be granted leave to file the proposed amended notice of cross-claim and accompanying statement of claim. The Court also scheduled a continuation of the hearing of the interlocutory application filed by Smart EV Solutions Pty Ltd and Smart Grid Investments, and reserved the costs of the interlocutory applications to be dealt with at the hearing.

Orders

Orders of the court

1. On the application filed on 29 July 2024:

(a) pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01(1)(a) of the Federal Court Rules 2011 (Cth):

(i) the first cross-respondent, Smart EV Solutions Pty Ltd, have judgment on the Amended Notice of Cross-Claim as against the cross-claimants

(ii) the Amended Cross-Claim filed on 11 June 2024 be otherwise dismissed as against the first cross-respondent, Smart EV Solutions Pty Ltd;

(b) the cross-claimants pay the first cross-respondent’s costs of the cross-claim to be taxed or agreed.

2. On the interlocutory application filed on 2 September 2024:

(a) the relief sought in paragraph (2) of the interlocutory application be dismissed;

(b) the first cross-claimant and the third cross-claimant pay the cross-respondents’ costs of and incidental to paragraph (2) of the interlocutory application on an indemnity basis.

IT IS DIRECTED THAT:

3. By 4.00pm on 3 October 2024, the cross-claimants provide to the cross-respondents any proposed Amended Notice of Cross-Claim and accompanying Statement of Claim in respect of which they intend to seek leave to file.

4. By 4.00pm on 17 October 2024, the cross-respondents indicate in writing whether they agree to leave being granted for the filing of the proposed Amended Notice of Cross-Claim and accompanying Statement of Claim or oppose the granting of leave.

5. If, pursuant to order 4 above, the cross-respondents or any of them oppose the granting of leave in respect of the proposed Notice of Cross-Claim or accompanying Statement of Claim, then:

(a) there will be a hearing at 9.30am on 29 October 2024 on the question of whether the cross-claimants should have leave to file any Amended Notice of Cross-Claim and accompanying Statement of Claim;

(b) the cross-respondents who oppose the granting of leave are to file and serve any submissions opposing the grant of leave by 4.00pm on 22 October 2024;

(c) the cross-claimants are to file and serve any written submissions in support of their application for leave to file the proposed Amended Notice of Cross-Claim and Amended Statement of Claim by 4.00pm on 25 October 2024.

6. There will be a continuation of the hearing of the cross-respondent’s interlocutory application filed on 29 July 2024 at 9.30am on 29 October 2024.

7. The remainder of any issues arising from the interlocutory applications filed on 29 July 2024 and 2 September 2024, are adjourned to 9.30am on 29 October 2024.

8. Save as have otherwise been dealt with, the costs of the interlocutory applications filed on 29 July 2024 and 2 September 2024 are to be reserved to the hearing on 29 October 2024.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Before the Court are two interlocutory applications. The first, which was filed by the applicants in the proceeding on 26 July 2024, seeks an order for summary judgment on part of the cross-claim and, in the alternative, to strike out several paragraphs of the amended statement of cross-claim. The second application, which was dated 30 August 2024, is brought by the cross-claimants, by which they seek leave under s 237 of the Corporations Act 2001 (Cth) (Corporations Act) to bring certain derivative claims against the applicants.Background There is no need to set out in detail the background of the occasioning of the dispute between the parties, though a brief description is appropriate. In early 2020, Mr Guy and Mr Dale Cook (the latter of whom is presently a director of the applicant companies) entered into discussions in which they contemplated going into business together. The proposed business concerned the development and supply of electric vehicle charging technologies and hardware. Over time, several companies were formed for the purposes of the commercial operations which were undertaken. Smart Grid Investments became the holding company of the group of companies, whilst Smart EV Solutions was an operational company. The directors of Smart EV Solutions included Mr Cook and Mr Guy, amongst others who were also investors in the business. Mr Guy was also the managing director of Smart EV Solutions, in an employed position. The relationship between Mr Guy, as managing director, and Smart EV Solutions was recorded in an employment contract which imposed duties on Mr Guy in relation to his employment, his use of confidential information, and his conduct after the termination of his employment. Relevant to the issues before the Court is a shareholders’ agreement between the members of Smart Grid Investments, which included Mr Guy and Mr Cook. The agreement provided, amongst other things, for the restraint of the use of confidential information owned by Smart Grid Investments and it is that restraint on which the applicants partly rely in these proceedings. From around June 2022, the relationship between Mr Guy and the other directors of Smart Grid Investments and Smart EV Solutions deteriorated. That resulted in the resignation of Mr Guy as the managing director of Smart EV Solutions. It should be observed that Mr Guy alleges that he was effectively forced out of the management and control of Smart EV Solutions, but that is a dispute which need not be resolved on the current application. In November 2022, Mr Guy resigned as a director of Smart EV Solutions, and, shortly thereafter, as a director of Smart Grid Investments. In relation to their claims of misuse of confidential information, Smart EV Solutions and Smart Grid Investments allege that shortly prior to his resignation as director, Mr Guy wrongfully downloaded a database maintained by Smart EV Solutions, which contained all the quotations and proposals issued by the company to its customers, as well as the contact details of its customers. Very soon after that, Mr Guy incorporated Charge Hub, of which he is the sole director and secretary and of which the sole shareholder is Guy O’Sullivan. Charge Hub competes in the same business as Smart Grid Investments and Smart EV Solutions.

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

Full text does not contain this section.