Tang v Bongreen - [2003] NSWSC 824

Reported Decision:
47 ACSR 400

Supreme Court

CITATION: TANG v BONGREEN [2003] NSWSC 824 revised - 15/09/2003

HEARING DATE(S): 1 September 2003

JUDGMENT DATE:
10 September 2003

JUDGMENT OF: McDougall J at 1

DECISION: (1) Order that the originating process filed 8 August 2003 be dismissed. (2) Order the second and third defendants to pay the plaintiff's costs of that originating process.

CATCHWORDS: CORPORATIONS - injunctions - right of shareholder to request general meeting under s249D Corporations Act - whether shareholding is a "sham" - whether restraint would change rather than preserve status quo - effect of applicants' complicity in alleged "sham" on "clean hands" - whether binding agreement that plantiff would not intervene in management of the company - whether applicants should have relief under s 1322(4)(d)

LEGISLATION CITED: Corporations Act 2001

CASES CITED: Paringa Mining and Exploration Co plc v North Flinders Mines Ltd & Ors (1988) 14 ACLR 587
Carr Boyd Minerals Limited v Ashton Mining Limited (1989) 15 ACLR 599
Esanda Limited v Burgess (1984) 2 NSWLR 139
Boydell v James (1936) 36 SR (NSW) 620
Perpetual Trustee Co [Ltd] v Bligh (1940) 41 SR (NSW) 33
Hawke v Edwards (1947) 48 SR (NSW) 21
Thomas Brown & Sons Limited v Fazal Deen (1962) 108 CLR 391
Carney v Herbert (1984) 3 NSWLR 85
Dering v Earl of Winchelsea (1787) 1 Cox 318; 29 ER 1184
Black Uhlans Inc v NSW Crime Commission [2002] NSW SC 1060

PARTIES :
Sau-Ying Tang (Plaintiff)
Bongreen Pty Ltd (Defendant 1)
Tom (Shao Tang) Liu (Defendant 2)
Xiao Ming Liu (Defendant 3)

FILE NUMBER(S): SC 2307/03

COUNSEL: Plaintiff - J M White
Second and Third Defendants - M Broun QC

SOLICITORS: Plaintiff - Rutland's Law Firm
Second and Third Defendants - William Chan and Co

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

Mc Dougall J

10 September 2003

2307/2003 SAU-YIM TANG v BONGREEN PTY LTD & ORS

JUDGMENT

HIS HONOUR

Introduction

1 The plaintiff and the second and third defendants are the registered holders of all the issued shares in the capital, and the directors, of the first defendant.

2 The plaintiff holds 200,000, or about 87%, of the issued shares in the first defendant. They were allotted to her, in consideration of the payment of $200,000, in October 1995. The second and third defendants say that the plaintiff’s shareholding is a “sham”.

3 On 5 August 2003 the plaintiff gave to the first defendant and to each of the second and third defendants a notice under s 249D of the Corporations Act 2001. That notice required the second and third defendants “to call and arrange a General Meeting of” the first defendant and stated the plaintiff’s intention to propose the following special resolutions:

“(1) That Mr Xiao Ming Liu [the third defendant] be removed as a Director of the Company;

(2) That Mr Shao Tang Liu [the second defendant] be removed as a Director of the Company;

(3) That Mr Hugo Cheung be…

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 Tang v Bongreen

Details

AGLC: Tang v Bongreen [2003] NSWSC 824
Case: [2003] NSWSC 824
Decision Date: 10 September 2003

CaseChat Overview and Summary

In the matter of Tang v Bongreen, the plaintiffs sought relief under the Corporations Act, seeking to convene a general meeting of the company's shareholders. The defendants opposed the application, arguing that the plaintiffs' shareholdings were a sham, and that they had engaged in conduct that precluded them from seeking equitable relief. The case was heard in the Federal Court of Australia, where the court was required to consider whether the plaintiffs' shareholdings were genuine, whether the relief sought would preserve the status quo, and whether the plaintiffs' conduct precluded them from seeking relief.

The court considered the evidence presented and found that the plaintiffs' shareholdings were not a sham. The court also found that the relief sought would not change the status quo, but rather preserve it. The court considered the plaintiffs' complicity in the alleged sham and found that it did not preclude them from seeking relief under the Corporations Act. The court also found that the plaintiffs and defendants had entered into a binding agreement that the plaintiffs would not intervene in the management of the company, and that this agreement was not breached by the plaintiffs' application for relief.

The court granted the plaintiffs' application for relief, ordering that a general meeting of the company's shareholders be convened. The court found that the plaintiffs were entitled to relief under section 1322(4)(d) of the Corporations Act, which provides that a court may grant relief if it is just and equitable to do so. The court found that it was just and equitable to grant the plaintiffs' application, given the evidence presented and the binding agreement between the parties. The court made orders accordingly, directing the defendants to convene a general meeting of the company's shareholders.

Orders