Wang v HMG Capital Pty Ltd - [2022] VSC 748

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2022 02068

HUA WANG	Plaintiff
v
HMG CAPITAL PTY LTD (ACN 651 233 297)	1^st defendant
AND
PETER ANDREW LANG	2^nd defendant

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JUDGE:	Elliott J
WHERE HELD:	Melbourne
DATE OF HEARING:	18 November 2022
DATE OF JUDGMENT:	15 December 2022
CASE MAY BE CITED AS:	Wang v HMG Capital Pty Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 748

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PRACTICE AND PROCEDURE – Particular discovery – Relevance – Share sale agreement – Implied term of good faith – Overarching purpose and obligations – Application granted – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 29.08 – Civil Procedure Act 2010 (Vic), ss 7, 23, 26, 55.

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APPEARANCES:	Counsel	Solicitors
For the plaintiff	B Slocum	Madgwicks
For the defendants	A Segal	Danaher Moulton

HIS HONOUR:

IntroductionA.

In broad terms, this proceeding concerns a share sale agreement (“the Share Sale Agreement”) entered into on 13 July 2021 by the plaintiff, Hua Wang (“Wang”), for the sale of his shares in WH Investments Group Pty Ltd (“WH Investments Group”) to the first defendant, HMG Capital Pty Ltd (“HMG Capital”). The second defendant, Peter Andrew Lang (“Lang”), is a director of HMG Capital.
In or about August 2014, Lang invited Wang to invest in his new indoor trampoline and rock climbing entertainment business, Latitude Australia Holdings Pty Ltd (“Latitude”). On 16 April 2015, WH Investments Group was incorporated by Wang for the purpose of investing in Latitude. WH Investments Group subsequently purchased a 35 percent shareholding in Latitude on 26 April 2015 for the sum of $5,599,900.
Wang deposed that in mid-2021, he decided to sell his shares in WH Investments Group to Lang, who had allegedly offered to buy Wang’s indirect interest in Latitude. The Share Sale Agreement was structured such that an initial payment of $100,000 was to be paid for the shares at the date of completion, with a deferred payment of $5,900,000 to be paid no later than 12 July 2026 (that is, 5 years after the completion date). As a condition of the sale, WH Investments Group’s share documents were to be held in escrow until the deferred purchase price had been paid. On 13 July 2021, Lang became, and Wang ceased to be, a director of WH Investments Group.
Some 7 months after the execution of the Share Sale Agreement, on or about 28 February 2022, WH Investments Group (under the effective control of HMG Capital and Lang) disposed of its shareholding in Latitude to a competitor of Latitude, Bounce Holdings Australia Pty Ltd (“Bounce”). A dispute arose between Wang and the defendants as to whether the sale of WH Investments Group’s shares in Latitude to Bounce amounted to a breach of the Share Sale Agreement. This proceeding was subsequently commenced by writ on 3 June 2022. The trial is set down for hearing on 13 February 2023.
By summons filed on 16 November 2022, Wang sought an order…

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 Wang v HMG Capital Pty Ltd

Details

AGLC: Wang v HMG Capital Pty Ltd [2022] VSC 748
Case: [2022] VSC 748
Decision Date: 15 December 2022

CaseChat Overview and Summary

Wang sued HMG Capital, seeking particular discovery of a share sale agreement. The dispute arose from Wang's claim that HMG Capital had breached an implied term of good faith and fair dealing in the sale of shares. The Supreme Court of Victoria was tasked with determining whether Wang was entitled to discover the share sale agreement, which HMG Capital argued was irrelevant to the case.

The primary legal issue was whether the share sale agreement was relevant to Wang's claim, and thus discoverable under Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 29.08. HMG Capital contended that the agreement was irrelevant as it did not pertain directly to the alleged breach of the implied term of good faith. Wang argued that the agreement was relevant because it contained terms that could influence the overarching purpose and obligations of the transaction, including the implied term of good faith. The court needed to balance the principles of relevance and fairness in determining the scope of discovery.

The court held that the share sale agreement was relevant to Wang's claim, as it contained terms that could potentially impact the overarching purpose and obligations of the transaction, including the implied term of good faith. The court found that the agreement could provide insight into the context and terms of the share sale, which were pertinent to understanding the obligations of the parties. The court granted Wang's application for particular discovery, ruling that the share sale agreement was discoverable. This decision underscored the importance of considering the overarching purpose and obligations in determining the relevance of documents in discovery applications.

HMG Capital was ordered to provide Wang with the share sale agreement within 28 days of the judgment. The court emphasised the need for parties to act in good faith and ensure that all relevant documents were made available to the other party, to facilitate a fair and just resolution of the dispute.

Orders