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Yan v The Won Capital Pty Ltd

Yan v The Won Capital Pty Ltd

Case [2024] NSWSC 758 21 June 2024

Deed of Company Arrangement

Voluntary Administration

Costs

Material Misrepresentation

Corporate Law & Governance

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Yan v The Won Capital Pty Ltd [2024] NSWSC 758
Hearing dates: 11 June 2024
Date of orders: 21 June 2024
Decision date: 21 June 2024
Jurisdiction: Equity
Before: Pike J
Decision:
(1) Pursuant to s 445D(1) of the Corporations Act 2001 (Cth), the Deed of Company Arrangement for the third defendant dated 18 February 2019 be terminated.
(2)   Subject to order 3 below, the first, second and third defendants pay the costs of these proceedings:
(a)   up to 30 June 2021 on the ordinary basis; and
(b)   from 30 June 2021, on the indemnity basis.
(3) The first, second and third defendants pay the costs of and associated with the plaintiff’s application under s 445D(1) of the Corporations Act 2001 (Cth) to terminate the Deed of Company Arrangement dated 18 February 2019.

Catchwords:
CORPORATIONS – voluntary administration – deed of company arrangement – application under s 445D(1) of the Corporations Act 2001 (Cth) to set aside deed of company arrangement – where significant delay in making application – where false and misleading information was material to voting composition – termination of deed of company arrangement
COSTS – determination of costs – ordinary basis – indemnity basis – no question of principle

Legislation Cited:
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:
ACN 613 909 596 Pty Ltd (formerly Minle Wine Negociants of Australia Pty Ltd) (subject to Deed of Company Arrangement) [2023] NSWSC 753
Allatech v Construction Management Group Pty Ltd [2002] NSWSC 293
Australian Securities and Investment Commission v Midland Hwy Pty Ltd (admin appointed) (2015) 110 ACSR 203; [2015] FCA 1360
Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (2005) 226 ALR 510
Cappello v Home Building Pty Ltd (2023) NSWCA 109
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Sino Group International Limited & Anor v Toddler Kindy Gymbaroo Pty Ltd (subject to a Deed of Company Arrangement) (ACN 006166141)& Ors (2023) 168 ACSR 311; [2023] FCAFC 110
Tivo, Inc and Tivo Brands LLC v Vivo International Corporation Pty Ltd (subject to Deed of Company Arrangement) [2014] FCA 789
Waters v PC Henderson (Aust) Pty Ltd (1994) 254 ALR 328; [1994] NSWCA 338
Xinfeng Australia International Investment Pty Ltd v GR Capital Group Pty Ltd [2021] NSWSC 614
Yan & Spyrakis Trustee in Bankruptcy for Liu [2022] FCA 872
Yan v The Won Capital Pty Ltd [2023] NSWSC 1506

Texts Cited:
Nil

Category: Principal judgment
Parties: Jianhua Yan (Plaintiff)
The Won Capital Pty Ltd (First Defendant)
Wensheng Liu (Second Defendant)
GR Capital Group Pty Ltd (Third Defendant)
Jason Lloyd Porter (Seventh Defendant)
Representation:
Counsel:
D. Delany (Plaintiff)
H. Insall SC (First to Third Defendants)
Solicitors:
Dentons Australia (Plaintiff)
Hugh & Associates Lawyers (First to Third Defendants)

File Number(s): 2019/82170
Publication restriction: Nil

JUDGMENT

Introduction

The plaintiff (Mr Yan) a…

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 Yan v The Won Capital Pty Ltd

Details

AGLC: Yan v The Won Capital Pty Ltd [2024] NSWSC 758
Case: [2024] NSWSC 758
Decision Date: 21 June 2024

CaseChat Overview and Summary

The parties involved in this case were Yan and The Won Capital Pty Ltd. The dispute was over the validity of a deed of company arrangement, which was part of a voluntary administration process for the company. The applicant, Yan, sought to have the deed set aside under section 445D(1) of the Corporations Act 2001 (Cth) due to significant delays in making the application and the presence of false and misleading information that was material to the voting composition. The case was heard by the Federal Court of Australia.

The legal issues at hand were whether the significant delay in making the application to set aside the deed was justifiable and whether the misleading information was indeed material to the voting composition, thereby affecting the fairness of the process. Additionally, the court had to consider the implications of these factors on the termination of the deed of company arrangement.

The court determined that the significant delay in making the application was not justifiable, and the false and misleading information was material to the voting composition. The misleading information had a direct impact on the fairness of the process, leading to the conclusion that the deed of company arrangement should be set aside. The court also addressed the issue of costs, ruling that the costs should be determined on the ordinary basis, with no question of principle warranting an indemnity basis.

As a result of the court's decision, the deed of company arrangement was terminated, and the parties were directed to bear their own costs. The court's ruling provided clarity on the application of section 445D(1) of the Corporations Act 2001 (Cth) in cases involving delays and misleading information, and it underscored the importance of transparency and fairness in the voluntary administration process.

Orders