Turner v Richards

[2025] NSWCA 83

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Turner v Richards [2025] NSWCA 83

Hearing dates:

26 March 2025

Date of orders:

1 May 2025

Decision date:

01 May 2025

Before:

Leeming JA at [1];
Payne JA at [2];
Adamson JA at [91]

Decision:

(1)   Leave to appeal granted.

(2)   The draft notice of appeal found at Tab 3 of the White Folder stand as the notice of appeal.

(3)   Appeal dismissed.

(4)   Applicant to pay the first and second respondent’s costs.

Catchwords:

CORPORATIONS — Directors and officers — Appointment, removal and retirement of directors — Whether director was validly appointed — where director appointed by purported exercise of casting vote of board chairperson — whether chairperson validly appointed by earlier agreement allegedly made during conversation — where primary judge not persuaded that director was validly appointed by earlier agreement made during conversation

Legislation Cited:

Evidence Act1995 (NSW) s 136

Supreme Court Act 1970 (NSW) ss 75A, 103

Cases Cited:

Armagas Ltd v Mundogas SA [1985] 1 Lloyd’s Rep 1

Camenzuli v Hawke [2022] NSWSC 168

ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24

Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560

Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725

Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810

John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Onassis v Vergottis [1968] 2 Lloyd’s Rep. 403

Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789

Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883

Singh v Singh; Flora t/as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386

Tjiong v Chang [2025] NSWCA 25

Varma v Varma [2010] NSWSC 786

Watson v Foxman (1995) 49 NSWLR 315

Category:

Principal judgment

Parties:

Kieran Turner (applicant)
Joanne Richards (first respondent)
Bernice Hooker (second respondent)
Bernley Corporation Pty Ltd (third respondent)
Heartland Group Pty Ltd (fourth respondent)
Boyded Industries Pty Ltd (fifth respondent)
HMG Parts Pty Ltd (sixth respondent)
Heartland Motors Pty Ltd (seventh respondent)
Heartland Blacktown Pty Ltd (eighth respondent)
Heartland Penrith Pty Ltd (ninth respondent)
Chicago Properties Pty Ltd (tenth respondent)
T S Management Pty Ltd (eleventh respondent)
BGW Nominees Pty Ltd (twelfth respondent)
Rossfield Nominees (A.C.T.) Pty Ltd (thirteenth respondent)
Australian Securities and Investments Commission (fourteenth respondent)
Anthony Turner (fifteenth respondent)

Representation:

Counsel:
M Izzo SC / T Boyle (applicant)
S Robertson SC / A R Langshaw (first and second respondent)

Solicitors:
McCabes (applicant)
MinterEllison (first and second respondent)

File Number(s):

2024/338525

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity – Corporations List

Citation:

[2024] NSWSC 875

Date of Decision:

19 July 2024

Before:

Black J

File Number(s):

2024/205160

HEADNOTE

[This headnote is not to be read as part of the judgment]

Anthony Turner (“AT”) was purportedly appointed as a director of various companies in the Heartland Motor Group on 6 December 2022. Prior to 6 December 2022, Kieran Turner (“KT”) and Ms Joanne Richards were the only directors of the companies. At the board meetings on 6 December 2022, KT voted in favour of the resolutions appointing AT as a director of each of the companies and Ms Richards voted against those resolutions. KT asserted that he was chair of the companies and purported to exercise a casting vote in favour of the resolutions. Ms Richards asserted that KT was never made chair.

KT contended that an oral agreement was made during a conversation in the first half of 2019 by which he was appointed as chair of the board of directors of all of the companies in the Heartland Motor Group for so long as he retained his direct or indirect shareholding in the ultimate holding company of the group, B.G. Webb Pty Ltd. This alleged conversation was not recorded in any contemporaneous documents. Two of the participants in the alleged conversation, KT’s grandmother and KT’s mother, died before the hearing.

On 4 July 2024, by Amended Originating Process filed at the hearing before Black J in the Corporations List, Ms Richards and Ms Bernice Hooker (KT’s aunts, who held the majority of shares in BG Webb) sought relief against KT, against several corporate entities in the Heartland Motor Group and against AT. The primary judge had earlier ordered that the issues raised by the Originating Process be heard separately, and in advance of a cross-claim that had been foreshadowed by KT.

The primary judge was not persuaded that a conversation occurred in the terms asserted by KT and held that the 6 December Resolutions that appointed AT as director of the companies, relying on KT’s casting vote, were invalid. KT sought leave to appeal. The issue on appeal was whether or not the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence.

The Court, (per Payne JA, Leeming JA and Adamson JA agreeing at [1] and [91]) held, granting leave to appeal but dismissing the appeal:

1. The primary judge undertook a conventional process of fact finding about a disputed conversation about which there was no contemporaneous record: at [16], [58]-[62]. Although no adverse credibility findings were made against KT or Ms Richards, the primary judge's failure to be persuaded by KT’s evidence was affected by his Honour's assessment of the reliability of that evidence, having seen and heard KT and Ms Richards being cross-examined: at [64]. The reliability of KT’s account was expressly challenged in cross-examination: at [67]. The primary judge had the advantage of seeing and hearing KT and Ms Richards give evidence. Weight must be given to the advantage that the primary judge had in those circumstances: at [74].

   Watson v Foxman (1995) 49 NSWLR 315; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810]; Varma v Varma [2010] NSWSC 786; : Armagas Ltd v Mundogas SA [1985] 1 Lloyd’s Rep 1; Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789; John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451; ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560; Onassis v Vergottis [1968] 2 Lloyd’s Rep. 403; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 applied. Tjiong v Chang [2025] NSWCA 25 considered.

2. The primary judge, having considered all of the evidence, did not err in finding that he was not persuaded that KT had proved to his satisfaction that a conversation occurred in the terms asserted by KT. The case was decided by considering whether KT had discharged his onus of proof: at [73].

3. If it were necessary to determine the issue on rehearing, the Court was not persuaded that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence: at [76]. The conversation was recorded for the first time in KT’s affidavit made five years after the asserted conversation in remarkably specific terms: at [77]-[78], [81]. The contemporaneous documents tended against a finding that the meeting occurred: at [78], [80]. If it occurred, the conversation must have taken place in January or February, but referenced the end of financial year: at [79].

JUDGMENT

1. LEEMING JA: I agree with Payne JA that while there should be a grant of leave, the appeal should be dismissed. That is because I agree, for the reasons that his Honour gives, that (a) no error has been shown in the reasoning of the primary judge leading to his not being satisfied that the meeting in 2019 alleged by Mr Kieran Turner took place, (b) if this Court were to redetermine that issue based on the record of the hearing, I would not be satisfied that the meeting in 2019 took place, and (c) it is unnecessary and therefore inappropriate to determine ground 2. I agree with the orders proposed by Payne JA.

2. PAYNE JA: These proceedings involve a narrow question relating to several corporate entities associated with the Heartland Motor Group. Ms Joanne Richards and Ms Bernice Hooker, the first and second respondents, are sisters. The applicant is Mr Kieran Turner, who I will refer to as KT to distinguish him from his brother Anthony Turner, the fifteenth respondent, who I will refer to as AT. KT is the nephew of Ms Richards and Ms Hooker; his mother, the late Ms Kathryn Turner, was the sister of Ms Richards and Ms Hooker.

3. The issued share capital of the holding company of the Heartland Motor Group, B.G. Webb Pty Ltd (“BG Webb”), is owned by Mr and Mrs Webb’s descendants. Ms Richards and Ms Hooker (Mr and Mrs Webb’s surviving daughters) hold the majority of the shares in BG Webb. KT, personally and through his ownership of the shares in Turnercorp Pty Ltd, owns or controls a minority of the issued shares in BG Webb.

4. BG Webb in turn owns all the shares in the third respondent, Bernley Corporation Pty Ltd (“Bernley”). Since 28 June 2013, Bernley has owned 599 of the issued shares in the fourth respondent, Heartland Group Pty Ltd (I will refer in these reasons to this company as “Heartland Group” and to the corporate group of related entities, including Heartland Group, as “the Heartland Motor Group”). One share in Heartland Group is owned by its wholly owned subsidiary, the fifth respondent, Boyded Industries Pty Ltd (“Boyded”) as trustee for the Rossfield Group Trust (“Trust”). The remaining corporate respondents, the sixth to thirteenth respondents inclusive, are all (directly or indirectly), subsidiaries of Heartland Group.

5. On 4 July 2024, by Amended Originating Process filed at the hearing before Black J in the Corporations List, Ms Richards and Ms Hooker sought relief against KT, against the Heartland Motor Group and against AT. The primary judge had earlier ordered (on 7 June 2024) that the issues raised by the Originating Process be heard separately, and in advance of a cross-claim that had been foreshadowed by KT seeking relief for oppression. Only Ms Richards, Ms Hooker and KT took an active role in the proceedings. The respondent companies did not seek actively to participate in the resolution of the dispute between their shareholders and directors. The Australian Securities & Investments Commission (“ASIC”) (the fourteenth respondent) and AT each filed submitting appearances.

6. The narrow issue in this case relates to the purported appointment of AT as a director of various Heartland Motor Group companies on 6 December 2022. That narrow issue turns on the acceptance or rejection of a single conversation in 2019, which was not recorded in any contemporaneous document, in which KT asserted that he had been validly appointed as chair of the board of directors of all of the companies in the Heartland Motor Group for so long as he retained his direct or indirect shareholding in BG Webb. Two of the participants in that alleged conversation, KT’s grandmother and KT’s mother, had died before the hearing. The primary judge was not satisfied that a conversation occurred in the terms asserted by KT.

7. The primary judge went further and concluded that even if KT was the chair of the board of directors of all of the companies in the Heartland Motor Group on 6 December 2022, the primary judge would in any event have found that AT’s appointments as director of various Heartland Motor Group companies expired on the passage of the last date after which an AGM should have been held under those companies’ constitutions.

8. On 19 July 2024, the primary judge delivered his decision: In the matter of Heartland Group Pty Limited and others [2024] NSWSC 875. Orders were made on 15 August 2024. Leave to appeal from those orders is required under s 103 of the Supreme Court Act 1970 (NSW) because they concerned a question ordered to be determined separately. It is appropriate that leave should be granted.

9. For the reasons that follow, the appeal should be dismissed.

Relevant facts

10. Prior to 6 December 2022, KT and Ms Richards were the only directors of the companies related to Heartland Group. On 2 December 2022, KT gave notice to Ms Richards convening board meetings of, inter alia, Heartland Group, Boyded and Rossfield Nominees (A.C.T.) Pty Ltd (the 13th respondent) (“Rossfield Nominees”) to consider proposed board resolutions appointing AT as a director of each of those companies. Those proposed resolutions relied on powers contained in each of the constitutions of those companies for the board to appoint directors, in most cases for a limited term.

11. On 6 December 2022, at the board meetings of Heartland Group, Boyded and Rossfield Nominees, Ms Richards called for a vote as to the chair. KT asserted that he had already been appointed the chair of the relevant companies. KT voted in favour of resolutions appointing AT as a director of each of the companies. Ms Richards voted against those resolutions. KT purportedly exercised his casting vote as chair in respect of those resolutions. It was common ground that those resolutions were valid only if KT could exercise a casting vote as chair of the relevant meetings.

12. KT’s case was that he had been appointed the chair of all the companies in the Heartland Motor Group at an informal meeting with his grandmother, mother and aunt (Ms Richards) which was alleged to have occurred between about January 2019 and June 2019. In an affidavit affirmed on 26 June 2024, the applicant stated:

[56]   My appointment as Chair of each entity in the Heartland Motor Group was formalised during a family meeting held sometime between about January 2019 and June 2019 following my return from living in France (Appointment Meeting).

[57]   The Appointment Meeting I refer to immediately above took place at the home of my grandmother (my mother's mother) which was a unit in [redacted] Bellevue Hill, NSW.

[58]   The persons in attendance at the Appointment Meeting were my grandmother (Dulcie Webb), my mother (Kathryn Turner), the first plaintiff, Joanne Richards and myself. No minutes were taken of the Appointment Meeting as it was not a board or shareholder meeting, it was a meeting of family members with the material interest in the Group.

[59]   I recall the discussion at the Appointment Meeting was in the following terms:

Me: I am back from sabbatical and need to decide whether the break was a half time break or full time for me. If I leave then obviously I wouldn’t be CEO or Chairman but if I stay then I would need to be the full time CEO and Chairman until I am no longer involved in and don't hold shares in all the companies. I have compared the salaries of both positions and have them here for you. I propose this be accepted and we carry the business forward unless at some stage in the future I choose to leave. Agreed?

Joanne: Yes

Dulcie: Yes.

Kathryn: Yes

Me: OK, great. I am happy to start this clean in the new financial year.

[60]   The consequence and effect of this discussion was that I take on the role of, and be paid a salary to be permanent Chairman of each of the Heartland Motor Group of Companies so long as I was a shareholder of B.G. Webb Pty Ltd (ie the ultimate holding company of the Group).

13. Paragraph [60] immediately above was admitted, by agreement of the parties, subject to a limiting order under s 136 of the Evidence Act1995 (NSW) as evidence of KT’s understanding only.

14. Ms Richards did not recall being present at a meeting with KT between January 2019 and June 2019 as described by him and denied that any such meeting could have occurred. The primary judge found that such a meeting could have occurred but made no finding adverse to Ms Richards’ credit. The primary judge did not find it necessary to reach a finding as to KT’s credit and noted that it was preferable that he did not, where KT’s credit “will likely be in issue in the wider oppression claim that he has foreshadowed, possibly subject to the outcome of this hearing” (at [15]). The primary judge concluded (at [15]) that “I cannot reach a state of actual persuasion, and am unable to find on the balance of probabilities, that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence”.

15. Whether or not the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence was the crucial issue before the primary judge and the only real issue on ground 1 of the appeal.

Did the 2019 Meeting take place in the manner or substantially in the terms set out in KT’s evidence.

16. The primary judge undertook a conventional process of fact finding about a disputed conversation about which there was no contemporaneous record. The primary judge was not satisfied that a conversation in the form deposed by KT occurred. His Honour analysed the available evidence in detail from the commencement of the period during which KT contended the 2019 Meeting occurred. No challenge was made by either party to these conclusions of fact.

17. The relevant background to the alleged meeting was that KT had been the CEO of companies in the Heartland Motor Group since about 2009. In 2017, KT took an 18-month sabbatical in France from the Heartland Motor Group, returning to Australia in early 2019. Although KT asserted that the critical conversation took place “between about January 2019 and June 2019 following my return from living in France” there was no precise evidence about when KT returned to Australia beyond “early 2019”.

18. The first documentary evidence relevant to this issue is that, on 4 February 2019, Ms Richards and KT exchanged text messages about the fact that Mrs Webb (Ms Richards’ mother and KT’s grandmother) was then in hospital and as to the nature of her condition. Although precise dates are not available, Mrs Webb was in hospital on 4 February 2019. Ms Richards gave evidence that her mother was in hospital for 6-8 weeks in February-March 2019.

19. On 9 February 2019, KT and Ms Richards sent text messages, in apparently civil terms, as follows:

[Ms Richards]: “Got muttered voicemail from you”.

[KT]: “Ahh the good old pocket dial at the park with kids running amok”.

20. On 14 February 2019, Ms Richards and KT exchanged text messages, at about the same time as an email sent by Ms Richards to KT:

[KT]: “Hi Jo, [Mrs Webb] tells me she is feeling much better which is great to hear. I don’t feel it’s her turn but fingers and toes are always crossed. Any update on your possible acquisition?”

[Ms Richards]: “Mum is feeling much better but she has a long uncertain road ahead unfortunately. I have just sent you an email”.

21. On 14 February 2019, Ms Richards emailed KT, copied to Ms Hooker, Ms Turner and Mrs Webb, as follows:

“With regard to your offer for us to buy your interest in the Heartland group, we have been thinking carefully about it but have delayed because of mum’s illness. Now we have decided that we do not wish to buy out your interest, but we are comfortable with selling the whole business and land with it, providing it is for an attractive price, bearing in mind that it is not a particularly good time to be selling, maybe after the election.

We know that you would like to leave the business to pursue other interests, so we have no problem with Neal taking over as CEO while the sale process takes place. We are not sure if you would like to be involved in the sale, but if not we are happy to orchestrate it with some professional help of course.”

22. It is to be noted that it was KT’s case before the primary judge that the critical conversation “would likely have taken place prior to KT’s attempt to sell his interest in the group”. There is no precise evidence about when KT first notified Ms Richards of his attempt to sell his interest in the group but it is likely, given the contents of Ms Richards’ email, that it was some time before 4 February, when Mrs Webb was hospitalised, given the reference to “thinking carefully about it” and communication of a response being “delayed because of mum’s illness”. It is noteworthy that in KT’s recounting of the critical conversation, there is no reference whatever to any proposal by KT to sell his interest in the group.

22. Also on 14 February 2019, by a subsequent email to Ms Richards, copied to Ms Hooker, Ms Turner and Mrs Webb, KT advised that “while I was in France” KT had been approached by a dealer to buy his 10% interest in the Heartland Motor Group but didn’t progress it “out of respect for you girls”. KT asserted that he was confident of achieving a price of $[XX] million for his stake and that “once I sign the deal up I will notify you accordingly”.

23. On 19 February 2019, Ms Richards responded:

“Thanks for your email. I mentioned that we would be comfortable for the sale of the whole business including land, but the sale of a small interest to someone we don’t know doesn’t appear to be in anyone’s interest or indeed the company’s interest. The group’s finances and assets are very sensitive and confidential and making them available would need to be done only with proper restrictions and the board’s consent. We think that can best be done with a whole business sale. As you know, trying to sell your interest at the same time as we investigate the larger sale will likely cause problems and conflict with what we suggest is best for the group.

We seek your support for a sale process of the whole business and land.

Cheers Dulcie, Kate, Jo and Bess”

25. On 19 February 2019, KT then responded, expressing views about the difficulty of selling the whole group in the market at the time and observing, in a manner that suggested increasing impatience on his part:

“I need out and I am progressing that as we speak with an interested party.”

26. Communications concerning KT’s potential sale of his interest in BG Webb continued with emails dated 26 February 2019 from Ms Richards to KT and 26 February 2019 from KT to Ms Richards. The communications became increasingly aggressive.

27. By late February 2019, there was an issue about whether additional directors should be appointed to BG Webb. On 27 February 2019, Ms Richards wrote by email to KT and advised that:

“Your timing is very very short, but we really hope that we can sort this out, and we agree with your comment that it would be crazy, and not in the company’s interest, to let a non family member into our boardroom. Which raises an issue that we should address, and that is I think the others (Bess, Kate and mum) should also be appointed to the various company boards as they have an interest in all of this and particularly decisions have to be made in dealings with you and the companies.”

28. Ms Richards also suggested that she would arrange for a solicitor to contact KT’s solicitor.

29. On 28 February 2019, KT replied to Ms Richards, copying Mrs Webb, Ms Hooker and Ms Turner in his response and said:

“Why would you want to add Director liabilities to more family members? Do [Ms Turner, Ms Hooker and Mrs Webb] agree with this? [Mrs Webb] has always been against her nomination.”

30. KT also expressed discontent with Ms Richards’ approach to his proposed sale of his interest in BG Webb and referred to the possible sale of that interest to a third party.

31. On 1 March 2019, KT sent a text to Ms Richards in respect of a price for the sale of his shares in BG Webb.

32. Also on 1 March 2019, communications from a lawyer, Mr Hugh Scott, commenced. Mr Scott’s firm sent a letter to Ms Richards, Ms Hooker, Mrs Webb and Ms Turner comprising an engagement letter and disclosure and costs agreement, which described the relevant legal services as “advising generally regarding Heartland Motor Group”.

33. On 6 March 2019, by email Mr Scott advised Ms Richards, with copies to Ms Hooker and Ms Turner but not Mrs Webb:

“When Peter first raised the potential for issues to arise with the Group there was uncertainty who would be the client(s) so we issued a costs agreement to him subject to substituting the clients in the future. It is appropriate for a new agreement to be issued.

Attached is our costs agreement terms and retainer letter. As you know the matter is very fluid as to what will happen including the potential for a buy-out of [KT’s] interest. At this time however the nature of the estimate referred to in the agreement is predicated upon uncertainty with ongoing debate between the parties. Obviously that may change.”

34. The attached costs agreement and retainer letter was addressed to Ms Richards, Ms Hooker, Mrs Webb and Ms Turner but provided for signature only by Ms Richards; it allowed other parties to accept by conduct, but the primary judge found that there was no evidence that they did so.

35. On 7 March 2019, by email, Mr Scott advised KT’s solicitor with a copy to KT that:

“I understand my clients have previously notified your client that they considered it appropriate that each of the shareholders be appointed as directors in the B.G. Webb Pty Ltd company. Our ASIC search indicates that the current directors are Joanne Richards, Kathryn Turner and Kieran Turner meaning Dulcie Webb and Bernice Hooker are to be appointed as directors.”

36. That email referred to the receipt of consents to act as directors from Mrs Webb and Ms Hooker and attached copies of those consents and requested that KT execute a circulating resolution to make the relevant appointment.

37. Although the extent of Mr Scott’s retainer was raised in cross-examination, the primary judge decided that it would not be appropriate to reach findings as to the extent of that retainer as “these matters may well be in issue in the balance of the proceedings”.

38. On 14 March 2019, by email, Mr Scott wrote to KT, with a copy to KT’s solicitors, in respect of discussions concerning a possible sale of KT’s interest in BG Webb, observing that nothing had been agreed, nor committed to, including the structure and terms of any transaction. He advised that he not received a response from KT to emails requesting further information and observed that:

“You will appreciate that any transaction will require the approval of my clients. I assume that the fact that none of the details requested in my email dated 28 February 2019, concerning a proposed sale to a third party, have been provided means that such a sale is no longer being considered.”

39. Mr Scott also referred to a “proposed transaction” with BG Webb, although the content of that transaction is unclear, and followed up as to the circulating resolution attached to his earlier email.

40. The primary judge found that relations between the parties were “tense” by mid-March 2019. On 18 March 2019, Mr Scott sent an email stating that his clients did not approve the transaction set out in a draft contract, (which was not in evidence), because the price exceeded the value of KT’s shares in BG Webb. He also said that:

“My clients and their advisors continue to investigate options for the way forward. In this respect I note you continue to ignore my clients’ request that you sign the Circulating Resolution appointing the other shareholders as directors of B.G. Webb Pty Ltd. As you know my clients represent over 80% of the voting entitlements of the company and they again ask that you immediately sign the resolution without the need to call a meeting or meetings.

I am asked to request that all future communication concerning this matter be directed to me.”

41. On 18 March 2019, KT responded to Mr Scott’s email set out above as follows:

“I appreciate your clarity Hugh.

I will now focus on completing my sale with a third party, a position I preferred from the outset. I knew the family couldn’t and wouldn’t make a decision.

I will not be signing your proposed Circulating Resolution because I do not believe it is in the best interests [of Ms Hooker] or [Mrs Webb] or the Company. In fact, [Mrs Webb] has said many times she doesn’t want to be a Director and risk “going to jail”. Furthermore, I do not understand why all of a sudden these 2 persons would like to expose their personal liabilities accordingly especially when they are very hands off and [Mrs Webb] is ill. If your sneaky intention is to out vote me selling my shares then I will sell my holding Family Trust which has already been dealt with by my team and I.

I will continue to speak to my Mum and [Mrs Webb] about any matters of the company when and how I feel like it.

[Ms Richards] is bullying the other family members, none of which are savvy or experienced business people, and steering this ship into an iceberg. I will not be here to watch…”

42. On 18 March 2019, KT also sent a text to Ms Richards, in somewhat hostile terms, as follows:

“Hi Jo, [Mr Scott] told me your not interested and that’s fine although foolish, but I would love a copy of your so called valuation that’s says my price is many times too high? I’m betting you don’t have this and are making this personal. I am exiting the business because of you and yet here you are trapping me in. Very strange, although not unusual … you will regret this.”

43. Communications about these matters continued on 2 April 2019, when Mr Scott again confirmed that his clients did not wish to buy KT’s shares in BG Webb at the price which KT proposed.

44. On 16 April 2019, by email, KT advised Mr Scott that, absent a circular resolution, presumably permitting the transaction, the proposed purchaser of his shares in BG Webb would “walk”.

45. On 16 April 2019, Mr Scott responded that his clients had “at all times acted reasonably and with everyone’s interests, including the company’s, foremost in their approach” and stated that:

“My clients do not wish to frustrate your exit from the Group but they are simply not in a position to provide you with the approval that you seek without the adequate information requested and the consideration of, and advice from, their advisors with respect to that information. To ask them to do so is unreasonable, particularly in the time frame that you suggest.”

46. On 19 April 2019 KT responded, in strong terms, that:

“As warned, my buyer has walked. It’s been an incredibly difficult process trying to separate from the family in business and I am not wasting another minute on it. Your intent is frustratingly clear and unwavering. You have destroyed a good idea and deal out of sheer stubbornness and stupidity. The process has proven to been full of back flips (4 in 4 months) and stonewalling and your recent refusal to sign my [circulating resolution] is the straw that broke the camels back. Ironically, your illegal and immoral entrapment of my minority equity is flattering.

I need to focus back on the business and protect my 10% equity from further loses.

Don’t contact me again.”

47. On 27 June 2019, KT said in an internal email (not copied to Ms Richards) that he wished to increase his “CEO salary” and his “Chairman’s salary.” The primary judge observed, however, this matter would be explicable by a practice that accepted his taking the role of chair, consistent with the group’s prior practice of combining the role of chief executive and chair.

Findings of the primary judge about whether the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence

48. The primary judge recognised that the respective recollections of KT and Ms Richards and their evidence as to the 2019 meeting could well be distorted by their respective economic interests in KT retaining or Ms Richards (with Ms Hooker) obtaining control at board level of the Heartland Motor Group. The other persons who are alleged to have attended that meeting have died and there is no contemporaneous recording that the meeting occurred or what was said at it.

49. The primary judge found that there was a very limited period in which that meeting could have occurred, before the applicant and Ms Richards became involved in contentious discussions about the sale of KT’s shares in BG Webb and the increasingly fraught discussions about whether the other shareholders would consent to that course. Once the share sale discussions had commenced, the primary judge was not convinced that the meeting would have occurred without reference to those sale discussions or that the meeting would have so readily resulted in the applicant’s appointment as chair.

50. The primary judge found that Ms Richards acted as chair of directors’ meetings while KT was on his 18-month overseas sabbatical and for at least one meeting after his return. By mid-2022, the dispute about board control of the companies had emerged. The primary judge noted KT asserted at directors’ meetings of Bernley and Heartland Group on 29 May 2024, that he was “voted Chairperson in 2018 for the duration of while he is a shareholder”, but observed that by then the dispute was well-advanced.

51. The primary judge noted that KT’s account of what was said allegedly commenced with his reference to his return from France but does not refer to the failed discussions about the sale of his interest. The conversation would have had to have occurred when Mrs Webb was at her home, where the meeting is alleged to have occurred, and not during her period of hospitalisation.

52. No contemporaneous documents refer to or record the 2019 Meeting or the conversation. Other than Ms Richards, the other people present at the suggested meeting have died. The primary judge was not persuaded by Ms Richards’ evidence that the 2019 Meeting could not have occurred because she was estranged from the applicant and because it was not recorded in her diary.

53. The primary judge accepted that it was possible that an agreement was reached in 2019 to the effect set out in KT’s evidence. This was because Ms Richards as a director of companies within the Heartland Motor Group and its shareholders had previously accepted, as a matter of practice, that the applicant would act as the companies’ chair while he was also chief executive officer of the Heartland Motor Group, as his predecessors had done. The parties proceeded on the basis that the CEO would act as chair until Ms Richards and Ms Hooker sought to take control of the companies’ boards in 2022. KT did not contend that there was any form of estoppel or acquiescence arising from the conduct of the parties, which would prevent Ms Richards and Ms Hooker subsequently taking the course they adopted in 2022.

54. The fact that his Honour was not persuaded by Ms Richards’ evidence that the 2019 Meeting could not have occurred did not have the consequence that he accepted KT’s evidence of what was said at that meeting. His Honour found that “a wider range of possibilities is obviously available”. The primary judge concluded:

[67]   I accept that it is possible that an agreement was reached to the effect set out in KT’s evidence, and I think it likely that Ms Richards as a director of companies within the Heartland group and its shareholders had previously accepted, as a matter of practice, that KT would act as the companies’ chair while he was also chief executive of the Heartland group, as his predecessors had done, and the parties proceeded on that basis until Ms Richards and Ms Hooker sought to take control of the companies’ boards in 2022. However, there was a very limited period in which that meeting could have occurred, before KT and Ms Richards became involved in contentious discussions as to the sale of his shares in BG Webb; Mrs Webb was in hospital and not at her home, where the meeting is said to have occurred, for a part of that period; it is doubtful that, once the share sale discussions had commenced, the meeting would have occurred without reference to them and so readily reached the result that KT sought; no contemporaneous documents refer to or record the 2019 Meeting or the resolution for which KT contends; and the other persons present at the suggested meeting have died. I am unable to reach a state of actual persuasion that, and I am unable to find on the balance of probabilities that, the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence, notwithstanding the parties’ acceptance by conduct that KT was chair of the companies over an extended period. KT did not contend that there was, for example, any form of estoppel or acquiescence arising from the conduct of the parties, which would prevent Ms Richards and Ms Hooker subsequently taking the course they have adopted since 2022.

55. Accordingly, the primary judge held that the 6 December Resolutions that appointed AT as director of the companies, relying on the applicant’s casting vote, were invalid. AT was not effectively appointed a director of Heartland Motor Group companies by the 6 December Resolutions.

Grounds of appeal

56. The applicant’s draft notice of appeal, contained two grounds:

1   The primary judge erred in failing to find that the Appellant was the chairman at meetings of Heartland Group Pty Ltd (Heartland Group), Rossfield Nominees (ACT) Pty Ltd (Rossfield Nominees) and Boyded Industries Pty Ltd held on 6 December 2022, because a meeting had occurred in 2019 at which it was agreed that the Appellant was to be the chair of the companies in the group so long as he held shares in BG Webb Pty Ltd.

2   The primary judge erred in finding that, on the proper construction of the articles of association of Heartland Group and Rossfield Nominees, any appointment of Anthony Turner as a director expired by 31 December 2023.

57. It was common ground that unless the applicant succeeded in relation to ground 1, ground 2 did not arise.

Ground 1 of the notice of appeal

58. The primary judge adopted a conventional approach to fact finding in a case based on an alleged oral agreement. His Honour had regard to the fallibility of human memory which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma [2010] NSWSC 786 at [424]-[425].

59. His Honour also had regard to the fact that objective evidence, where available, is likely to be the most reliable basis for determining matters of credit that arise as to the affidavit evidence: Armagas Ltd v Mundogas SA [1985] 1 Lloyd’s Rep 1 at 57; Re Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789 at [10]. The primary judge noted the matters relevant to the assessment of spoken words in the context of a contractual dispute, which were identified by Hammerschlag J in John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451:

[94]   Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.

60. His Honour bore in mind the observations of Bell P (with whom Bathurst CJ agreed) in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24 at [27]-[29] quoting with approval Legatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC (Comm) 3560 at [22]:

“…the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

61. There was every reason for the primary judge not to be satisfied about the reliability of KT's evidence of an asserted 2019 agreement. I do not accept the applicant’s submission that the decision of this Court in Tjiong v Chang [2025] NSWCA 25 at [41] and [502] intended to change the method of fact-finding in cases involving alleged oral agreements. The Court in Tjiong was not describing a new legal principle. The application of Tjiong leads to no different conclusion in this case. The point made by Basten AJA in Tjiong at [41] was that in a case where there is disputed oral evidence, all the evidence must be considered together. This task, the primary judge undertook here. Price AJA in Tjiong at [502] made the point that oral testimony should not lightly be disregarded in a case where there was no cross-examination casting doubt on the evidence and where there was no question of the reliability of the evidence. Here there was cross examination of KT about his account and a significant question about the reliability of that account.

62. No error has been shown in the conclusion of the primary judge, essentially for the reasons his Honour gave, that he was unable to reach a state of actual persuasion that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence.

63. KT’s case was essentially a simple one. Shortly put, it was that in the absence of an adverse credibility finding about KT’s evidence there was no reason not to accept his evidence about the 2019 agreement. KT stressed that the primary judge made no adverse finding about his credibility. KT emphasised that what he said was a realistic possibility, namely that the meeting could have occurred before 14 February 2019. Accordingly, it was submitted that the primary judge erred in not reaching a state of actual persuasion that the alleged 2019 oral agreement had been reached in the terms asserted by KT.

64. I am unable to accept this submission. The primary judge made a finding of fact. Although no adverse credibility findings were made against KT or Ms Richards, the primary judge's failure to be persuaded by KT’s evidence was affected by his Honour's assessment of the reliability of that evidence, having seen and heard KT and Ms Richards being cross-examined.

65. As Lord Pearce said in Onassis v Vergottis [1968] 2 Lloyd’s Rep. 403 at 431:

“‘Credibility’ involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be... Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.”

66. In Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55], Bell, Gageler, Nettle and Edelman JJ made clear that a court of appeal is bound to conduct a “real review” of the evidence given at first instance and of the judge's reasons for judgment to determine whether the trial judge has erred in fact or law. Appellate restraint is, however, warranted in relation to a trial judge’s findings of fact unless those findings are “glaringly improbable” or “contrary to compelling inferences” if those factual findings “are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence” (emphasis added).. This principle of restraint applies to findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts.

67. KT’s evidence was given more than five years after the date of the alleged conversation in a context of ongoing hostility and litigation between the parties. The conversation was unsupported by any contemporaneous record and was inconsistent with a number of such records. I reject the applicant’s submission that the reliability of KT’s account was not challenged before the primary judge. The principal submission on behalf of Ms Richards at the trial was that KT’s evidence about this conversation should not be accepted as reliable. The reliability of KT’s account was expressly challenged in cross-examination.

68. The applicant submitted that there was nothing exceptional about the subject matter of the 2019 Meeting that might cause anyone to wish to record it. I do not agree. If such an agreement had been reached, it would have been a significant matter in the history of the Heartland Motor Group. While the Heartland Motor Group had a practice of the CEO of each company in the group acting as chair of the company, never before had there been a formal agreement to appoint a chair, in advance, dependent upon the CEO continuing to hold or control shares in BG Webb. There would have been every reason to have documented such a significant change.

69. Such contemporaneous documents as there are do not support the existence of an agreement in the terms asserted by KT. The high point of the applicant’s case is what the applicant submits is “a relatively contemporaneous” email of 27 June 2019 recording KT’s understanding that he was chair of the Heartland Group of companies. While this document does contain a reference to a subjective belief on KT’s part consistent with his case, at best it is neutral. The date of the email, 27 June 2019, is months after the conversation, if it occurred, must have taken place. The document is more consistent with the primary judge’s finding that it was a reflection of a long standing informal company practice of the CEO acting as chair, rather than a result of the asserted agreement.

70. It is true that the minutes of a directors’ meeting of BG Webb on 30 November 2022 contain the following:

(KT) opened the meeting and stated that he was the chairman, (JR) advised she would put herself up as chair for the meeting and voted in favour of her appointment. (BH) voted in favour of (JR) being appointed chair. (KT) said is the paid and appointed chairman.

…

Meeting proceeded with (KT) saying he was the chair.

71. By November 2022, relations between KT and Ms Richards had become fraught. Despite the claim by KT the “he was the chair” there is no record of his asserting that an agreement had been made with, inter alia Ms Richards, that he be appointed chair for so long as he held or controlled shares in BG Webb.

72. There is also a recorded claim by KT of the existence of the asserted agreement on 29 May 2024, where KT is recorded as saying he was "voted Chairperson in 2018 for the duration of while he is a shareholder". As well as referring to the wrong year, the primary judge observed that by 2024, the dispute between KT and Ms Richards was well-advanced. Further, KT participated in and signed minutes in a series of 2021 meetings of various of the Heartland Group of companies which record the separate election of KT as chairperson “of the meeting”: Boyded Industries Pty Ltd directors minutes 7 June 2021 (signed by KT on 22 June 2021); Chicago Properties Pty Ltd directors minutes 7 June 2021 (signed by KT on 22 June 2021); Heartland Blacktown Pty Ltd directors minutes 7 June 2021 (signed by KT on 22 June 2021). These company records are inconsistent with the existence of the oral agreement KT asserts was made. If such an agreement existed there would be no need separately for KT to be elected as chairperson “of the meeting”.

73. The primary judge was entitled to find, having considered all of the evidence, that his Honour was simply not persuaded that KT had proved to his satisfaction that a conversation occurred in the terms asserted by KT. The case was decided by considering whether KT had discharged his onus of proof. No doubt if his Honour had made a credibility finding, it would have been difficult for him to sit on the potential future stages of the proceedings. His Honour was also no doubt conscious that there was a possibility that more cogent evidence might come to light in the continuation of the trial that bore upon findings his Honour might have made as to credibility or reliability of the evidence he was considering.

74. The primary judge had the advantage of seeing and hearing KT and Ms Richards give evidence. Weight must be given to the advantage that the primary judge had in those circumstances. No error has been shown in the conclusion of the primary judge that his Honour was not satisfied of the existence of the oral agreement KT asserts was made.

75. I would dismiss ground 1.

76. Even if error had been shown in the decision of the primary judge and it became necessary for this Court to itself determine the issue in accordance with s 75A of the Supreme Court Act, I would conclude that the applicant has failed to persuade me that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence. This is for the following reasons.

77. First, I harbour significant doubts about the reliability of KT’s account. KT cannot place when the conversation occurred, save for it being between about January 2019 and June 2019. The agreement, if it had been made, was a matter of significance for the Heartland Group of companies. KT’s inability to place the conversation any more precisely than it having occurred at some time in the first six months of 2019 is a factor tending against acceptance of his account.

78. Secondly, KT’s asserted recollection was remarkably specific for a conversation which occurred five years ago and not recorded anywhere until the affidavit of KT was sworn in June 2024. If a conversation in the terms asserted by KT had occurred, it is remarkable that there is essentially no trace supporting the existence of this agreement in any cotemporaneous material. To the extent that the contemporaneous documents address this topic at all, they tend against acceptance of KT’s evidence about an agreement reached at a meeting in 2019. On the basis of the minutes of the various Heartland Motor Group companies in evidence, I harbour significant doubts that the 2019 Meeting took place in the manner or substantially in the terms set out in KT’s evidence.

79. Thirdly, the asserted terms of the agreement raise a significant question on their face. It is significant that, in a conversation which the applicant now submits must have occurred in January or early February, KT mentions the new financial year, even though it was then months away. This is a matter which casts doubt on KT’s account.

80. Fourthly, a very short time after the alleged conversation, the applicant was actively trying to sell his shares in BG Webb. Despite there being a good deal of increasingly heated correspondence between KT and Ms Richards (and her legal representative), there is no mention whatever of any agreement that KT be appointed as permanent chair for so long as he owned or controlled shares in BG Webb. If, in the very recent past, such an agreement had been reached, I would expect to see some reference to it in the correspondence between the principal protagonists. The absence of any reference is a factor tending against acceptance of KT’s account.

81. Fifthly, the terms of the alleged conversation in 2019 are also notable that in the context of KT’s affidavit where all other conversations are referred to (in the conventional form) as comprising “words to the following effect”: see the conversations at [43], [45] and [46]. By contrast, the critical conversation is said to have occurred “in the following terms”. This apparently deliberate decision to assert the exact terms of the conversation which occurred over 5 years ago causes me to doubt the reliability of KT’s account.

82. Sixthly, KT’s account of the critical conversation included a statement that he produced at the meeting a document which “compared the salaries of both positions and have them here for you”. The applicant led no evidence of the existence of any such document. The only document in evidence which addressed any issue of payment of the chair was dated 27 June 2019, months after this conversation, if it occurred. There was no evidence to suggest that, after February 2019, KT went from receiving no salary as chair to receiving a salary as chair. Indeed, there was no evidence of KT being paid anything for being chair of the companies. This remuneration question was specifically referenced in KT’s account of the critical agreement. The topic was well within KT’s capacity to explain but was left unaddressed in KT’s evidence. This is another matter which causes me to doubt the reliability of KT’s account.

83. Even if I had discerned error in the decision of the primary judge in the way his Honour dealt with the alleged 2019 conversation, after the re-hearing (s 75A(5) of the Supreme Court Act) I am not satisfied that a conversation occurred in the terms asserted by KT.

84. Ground 1 should be dismissed.

Ground 2 of the notice of appeal

85. It is common ground that if ground 1 was dismissed ground 2 did not arise.

86. The primary judge found that the articles of association of each company provided that a director who is appointed by other directors of the company continues to hold office until the next following ordinary general meeting of the company. Although it was a requirement that an annual general meeting of those companies be held each calendar year, no ordinary general meeting of the companies had been held since 6 December 2022.

87. The primary judge considered the principle said to be established by Re Consolidated Nickel Mines Ltd [1914] 1 Ch 883. His Honour stated that the facts of this case, involving the construction of a proprietary company's articles of association, were relevantly indistinguishable from those considered in Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424; [2006] NSWSC 725 and Singh v Singh; Flora t/as Flora Constructions v Budget Demolition & Excavation Pty Ltd [2008] NSWSC 386. His Honour distinguished the decision in Camenzuli v Hawke [2022] NSWSC 168 in so far as it relied on the absence of reciprocity between those who had failed to call the annual general meeting as to who stood to benefit from the continuance of the directors in office. Even if he had upheld ground 1, the primary judge would have held that AT ceased to hold office as a director of Heartland Group and Rossfield Nominees on 31 December 2023.

88. The applicant’s challenge to Re Consolidated Nickel Mines Ltd, Gosford Christian School, Singh v Singh and the possible application of a different principle said by the applicant to have been recognised in Camenzuli should await a case where determination of those issues is dispositive.

89. Ground 2 should be dismissed.

Conclusion and orders

90. For the foregoing reasons I propose the following orders:

1. Leave to appeal granted.

2. The draft notice of appeal found at Tab 3 of the White Folder stand as the notice of appeal.

3. Appeal dismissed.

4. Applicant to pay the first and second respondent’s costs.

91. ADAMSON JA: I agree with Payne JA and with the additional remarks of Leeming JA.

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Decision last updated: 01 May 2025