Coffee and a Case Note

“Issuing those shares at an undervalue was unfair!”my dad is a farty bum___DCo, whose chief asset was a domain name related to real estate, issued shares in various tranches.In May 2018 the Ps subscribed at a value of $0.6667: [3]Some Ds were issued shares in various tranches at a lower value – from $0.001 to $0.02: [4]The Ps sought orders including that the lower priced shares were invalidly issued: [8](The Ps commenced parallel proceedings about related regarding DCo and its (deceased) controlling mind, C: [10])In May 2018, C caused DCo to make the share offer to the Ps on the basis $20m was needed to realise the value of DCo’s use of the domain name: [33]The offer included various warnings about the risk of investing, and was open only to sophisticated investors: [34] – [37], [41]The docs suggested the domain name and associated “intangible assets” had a value exceeding $70m: [38]The Ps responded, many investing hundreds of thousands of dollars thereby raising $23m at a $0.6667 per share valuation: [43]In July 2018, C caused their related entity to transfer ownership of the domain name to DCo in exchange for 80m shares for a value of $80K i.e. $0.001 per share: [45] – [48]Later in 2018 and through to June 2019, further shares were issued at the ~$0.001 – $0.02 value: [50] – [56]11 million shares were issued from late 2020 into 2021 at a price of $0.001 pursuant to options: [69]In 2022, following a whistleblower complaint, DCo circulated its alleged share register and invited corrections. No member alleged inaccuracy: [73] – [82]Ps brought their claim that issuing shares for inadequate consideration was oppressive: [109] – [112]The Ps’ concerns were the shares being transferred for a sum other than “market price” and a “self interested” transaction caused by C: [138], [139]As at April 2018, the transfer was not an undervalue; the “market” for shares in a $1 company was not significant: [142] – [144]Further, the warnings made in the original offer were such that the Ps’ acceptance of it was not oppressive: [169] – [171]The Ps’ contention that DCo should retain the value of domain name transferred to it without the shares issued to the former owner as consideration would be an unfair result: [179]In relation to lower priced shares issued to consultants and directors, the Court found a reasonable director of a start up may consider issuing shares to people who have made a valuable contribution (thereby securing their services) as a valuable incentive, and so not oppressive: [226], [227], [236]The Court found the issuing of 11.1m option shares was oppressive to the $0.6667 shareholders [261] but, in the context of other transactions and restructuring moves, had no continuing effect requiring s 233 relief: [281] – [283]The proceedings were dismissed: [287]___Please follow James d'Apice, Gravamen, and Coffee and a Case Note on your favourite platform.www.gravamen.com.au#auslaw #coffeeandacasenote #gravamen

"You chair that other company. You can't fire me from this one!"___The managing director of a company, MD, was purportedly fired from MainCo by the Chair of another company, ChiefCo: [1]ChiefCo was part of the same group but had no direct interest in MainCo: [3]The Chair had power over entities in the “Series” companies that formed part of the group: [4](MainCo was not a “Series” entity: [5])In taking the role as MD, MD was required to take a few directorial roles in other entities in the group, and retire from them if validly terminated: [8], [14]Various steps were taken in early 2025 suggesting ChiefCo and Chair thought their decisions would bind MainCo in spite of the relevant corporate docs suggesting the opposite: [9] – [11]After this it became clear any previous acquiescence by MainCo to Chair’s unilateral decisions binding all group members was resisted (except for “Series” entities): [12]It was put to Chair in corro that decisions of MainCo and other Cos in the group should be delegated to the relevant board in line with their constitutions, and not Chair or ChiefCo: [20], [21]In August 2025, Chair purported to terminate MD both as employee and so as director: [22]The evidence showed members of the group consulted with Chair, and Chair may have had a strong voice in hiring MD, but this did not confer authority on Chair to terminate MD absent constitutional authority or relevant board approval: [25]The Ps (being a large shareholder in the group, and a director appointed by that shareholder) sought orders including that MD’s purported terminated was of no effect: [1], [27]The Court accepted this on the basis that MainCo was “the Employer” in MD’s employment contract, and so the only party capable of terminating MD’s employment: [28]The Court rejected the Ds’ contention that the Chair had actual or implied authority to terminate MD and considered to the extent Chair ever did, that authority was revoked by the early 2025 correspondence: [29] – [39]The Court rejected the Ds’ contention that the Chair’s authority extended to “non-Series” members of the Group: [40] – [41]The Court rejected the Ds’ contention that the Chair approved MD’s employment agreement and so retained authority over MD’s employment generally, including termination: [46]The Court rejected the Ds’ contention that MD’s obligation to report to Chair as part of their role conferred authority on Chair to terminate MD: [50]The court found the Ps had standing to apply for the relevant relief (noting MD was not themselves a plaintiff) in their role as shareholder and relevantly appointed director: [53]As MD was not validly terminated they were not obliged to resign their relevant directorships: [56]The Court declared MD’s termination was of no effect, and MD remained in their role: [58]___Please follow James d'Apice, Gravamen, and Coffee and a Case Note on your favourite platform.www.gravamen.com.au#auslaw #coffeeandacasenote #gravamen

In August 2025 James had an opportunity to sit down with recruiter and expert podcaster Steve Cole to discuss his career path, his approach to marketing, and the many uses of his childhood nickname "Peach".We hope you enjoy this discussion!___You can find Steve's podcast 'Path to Partnership' here: Path to Partnership - Podcast - Apple Podcasts

James was lucky enough to sit down and chat with Amy Dale from the Law Society to have a deep chat about the law, life, and James' past - as well as some lighter moments chatting Gravamen merch and horror film podcasts!James doesn't hold back about personal reflections even on touchy subjects like mental health and money.(James also made sure he dropped Amy and the legendary co-host Francisco Silva one of his very popular Gravamen hoodies!)___You can find a link to the Law Society's 'Just Chat' podcast here: Just Chat Archives - Law Society Journalwww.gravamen.com.au

“My 1st claim was about land. I’m not estopped from bringing this one about shares!”___P sought orders confirming they were a shareholder in two Cos: [1]P, D1, and D2 were siblings. The shares were part of their parent’s estate: [2]In 1994, the parent made a will bequeathing their estate in equal parts to P, D1, and D2. In 2016, D1 obtained a grant of probate in respect of that will and transferred the shares to D1’s name: [2], [7]D1 then refused to distribute some of the estate (including the shares): [7]In 2018, P brought s66G proceedings re real property co-owned by the siblings, bequeathed to them by the parent. Those were finalised by consent: [8], [31], [32]P accepted in XX that it would have been neater if P claimed the shares in the 2018 litigation, but noted that D1 has promised to transfer the shares a number of times: [12], [13]From ~2016, after the parent’s death, the parties’ lawyers exchanged correspondence regarding the real property and the shares: [21] – [31]In that corro, D1 said the shares would be transferred to P in accordance with the will: [29], [30]Later in 2023, D1 said P pressed no further claim on the estate after the 2018 property litigation and did not seek the shares; and also said an Anshun estoppel arose: [36]P denied this, and in 2024 brought these proceedings: [36]P resisted the Anshun estoppel argument on the basis the 2018 proceedings related to specific real property, and not the parent’s estate generally: [37]The Court considered the relevant law including that an Anshun estoppel arises when “the matter relied upon in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.”: [40]Importantly, an estoppel does not necessarily arise because material *could* have been considered in the first claim. What is required is that it *should*: [41]P showed the shares’ status was not in dispute at the time of the 2018 proceedings. D1’s lawyers had indicated the share transfer was imminent: [48]The Ds pointed to P accepting in XX that it would have been “easier” had the 2018 proceedings dealt with the shares. The Court considered this evidence was informed by 2025 hindsight: [51], [52]The Court found there was no Anshun estoppel as: (i) ownership of the real property had passed at the time of the 2018 proceedings, meaning they did not concern the estate but a co-owners dispute [53]; (ii) at the time of 2018 proceedings, D1 had promised the share transfer would occur: [54]; and (iii) there is a strong public interest in holding an executor to their duties: [55]Nor did the Court find the application was an abuse of process: [57] – [61]Having, among other things, not established the Ds had suffered prejudice, nor was a delay defence successful: [72]The defences to P’s s175 application failed.___Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform!www.gravamen.com.au

P, a public company of some size, was obliged to have its accounts audited: [1]From 2016 to 2025 an auditor audited the Co’s financial reports. The auditor was qualified but not validly appointed in contravention of the Corps Act: [2]P sought a declaration pursuant to s1322(4) that the purported appointment of the auditor was not invalid: [3](Importantly, the order sought was that the appointment be declared not invalid pursuant to a certain section that would otherwise cause it to be invalid; rather than a declaration that the appointment was itself valid: [24])Broadly, a contravention of this kind can be ordered to be invalid if the mistake was (i) procedural, (ii) an honest error, (iii) and that there is no substantial injustice: [6]From around 1970 Mx A was appointed auditor. Over time “A & Co”, “A Partners”, “A Accountants etc” were appointed auditors – all of those entities related to Mx A: [11] – [14]In around 2016, Mx A died. Apparently their child, also named Mx A began work at the auditing firm: [14] – [16]Mx A, the younger, was a qualified auditor and fulfilled the role for P until early 2025, signing off similarly using a related entity: [16] – [20]In early 2025, P decided to put the role out to tender following tension between Mx A and P’s board: [21]Mx A resigned around this time, and the irregularity of their appointment as auditor was revealed: [22]There was no doubt that Mx A’s firm was retained as auditor and indeed performed the work and was paid for it: [23]The evidence tender satisfied the Court that P had a reasonable basis for suspecting the appointment was not properly made: [25]Following a consideration of the evidence, some of which evidence P’s searches of its own historical records, the Court was satisfied the potentially invalidity of the appointment was honest: [28] – [33]The Court considered shareholders and others who might be affected by the order sought and found there would be no injustice: [34] – [38]1322(4) relief is discretionary. While highlighting that the improper appointment of an order not a matter of small moment, the Court elected to exercise its discretion: [39] – [42]Following some amendments the Court made orders largely consistent with those sought by P: [50]The Court was not prepared to make orders that P and its dir complied with their duties where it appeared they had not done so: [49]___Please don't forget to follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform!www.gravamen.com.au

James had a chance to sit down and chat with the legend, boss of Ruby Assembly, and all-round all-star Iolanthe Gabrie on her podcast Real Ambition in June 2025.Together they get deep on branding, Rory Sutherland, and contemporary horror films. Check it out!You can find Iolanthe's podcast here: https://open.spotify.com/show/3fgIdiaiSxD4F8iZO7xgXo

James was lucky enough to sit down and chat with the legendary leader of Lawyers Weekly, Jerome Doraisamy in 2025 and had an in-depth conversation and life, law, and where Gravamen is still a side-hustle...You can find a link here https://www.lawyersweekly.com.au/podcast/42265-the-boutique-lawyer-show-unique-branding-charitable-donations-and-the-firm-as-a-side-hustle?utm_source=LawyersWeekly&utm_campaign=05_06_2025&utm_medium=email&utm_content=Boutique-Podcast&utm_emailID=55716e27c79db04faaa6ed1f3d3988938ab8fa86ca99f7fc2679bf363ed418c8

“You can’t sue in the company’s shoes. You’re not coming in good faith!”___ShopCo had two 50% shareholders, P and D. Each of P and D were Cos. P’s dir and D’s dir were the dirs of ShopCo. ShopCo owned a retail centre with a possible value of ~$53m: [2], [3], [57]The dirs had a falling out: [3]D provided property services to ShopCo, with P’s knowledge The arrangement was longstanding, but not reduced to writing: [5]Some of the services D provided were managing tenants, negotiating leases, collecting rent etc for ShopCo: [6]P alleged this work was real estate agent work and, as D was not a real estate agent, any commission should be repaid to ShopCo as a debt: [7] - [9]P sought leave to bring a claim pursuant to s237 leave to sue D for ~$700K it received on the above basis: [11], [12]Derivative action criteria (a) (will the Co bring the claim?), (d) (is there a serious question?), and (e) (notice requirements) were all met: [15]It remained for the Court to consider (b) (good faith), and (c) (best interests of ShopCo): [15](There is, with respect, a useful summary of some relevant derivative actions principles at [18] - [29])P’s dir and D’s dir ran similar developments together in the past. Their enmity appeared to arise from disagreements about other projects: [45], [46]Attempts were made by P and P’s dir to cause ShopCo to pursue its alleged claims against D. Those attempts failed: [47], [48]In relation to the best interests test, the Court considered no decision was necessary due to a conclusion P was not coming in good faith: [61]In doing so, the Court considered the proportionality of the sum potentially claimed from D (~$700K) alongside the possibility of some costs being unrecoverable in any action (due to not being real estate agent work): [59]In considering good faith, the Court noted a successful applicant must show (a) honest belief in the cause of action’s prospects, and (b) an absence of collateral purpose: [62]The Court gave 11 reasons (or perhaps up to 13: [66], [67]) for finding P did not come in good faith.Those included: (i) P put forward no basis for P’s belief in the prospects of the claim, nor any legal advice on that point, (ii) there were real risks in the proceedings, (iii) a strong argument that D provided services at cost (i.e. for no benefit) was not addressed by P, (iv) the cost estimate of the proposed litigation was $500K for a possible $700K benefit, and (v) there was no suggestion of any defect in the services provided by D: [65]P’s proposed course would see $500K in costs for a $700K return that would arise only if P’s submission that ALL work done by D was “real estate agent work” succeeded. A commercial return required complete success for P. This pointed away from good faith: [67]Having found the P did not meet the good faith requirement, leave was not granted: [72]___Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform!#auslaw #coffeeandacasenotewww.gravamen.com.au

“Don’t call the meeting to sell those shares!”___P was a shareholder in D1. D1 owned Techshares, shares in TechCo: [1]D1 did not trade. Its purpose was holding Techshares: [16] The Techshares were illiquid: [25], [26]A GM of D1 was called proposing D1 would either (i) sell the Techshares to a specified purchaser or (ii) failing that, go into MVL: [2]P sought injunctions restraining D1 from calling the meeting: [3]P said: P had made a purchase offer more favourable to D1 than the proposed offer, and inadequate time had been given to consider proposal (i): [6](An earlier injunction had been granted, restraining D1 from issuing further shares that would dilute P’s holding: [9], [10])Following the costs of the initial part of this litigation, D1’s dirs represented that it would need funding or D1 would be placed in VA or MVL with the Techshares sold for “fire sale” prices: [19], [20], [24]D1 hoped to obtain TechCo’s shareholder list to sell the Techshares. TechCo resisted, instead proposing Offeror: [30] - [32]Offers were made by Offeror: [34], [36]D1 sought TechCo’s approval to “shop” Offeror’s offer to other TechCo shareholders, but TechCo made no response: [39]Another, apparently more attractive offer, was made by another party backed by P’s controlling mind: [42]Interestingly, P (having changed its name, leading to brief confusion) made a further more attractive offer: [47] - [51]The D1 dirs reviewed all offers and (including because of some opacity with P’s finances) recommended that Offeror’s (apparently less attractive) offer be accepted: [65]P provided evidence to show it had the assets to underpin its offer: [70] - [73]Further corro was exchanged regarding the P’s (and the P’s controlling mind’s) ability to fund the offer: [74] - [78]The evidence put forward did not convince the Court of P’s ability to fund the offer: [79]RE (i) the Court found no serious Q in part because P’s argument (“a summary is not sufficient. The full offer should have been disclosed”) did not ID any part of the offer not disclosed in the offer summary: [87] - [91], [97], [101]With that, balance of convenience for (i) became irrelevant: [114]RE (ii) and the P’s previous application re share dilution the Court was prepared to proceed as if there was a serious question to be tried: [119]The Court found the BoC favoured a limited injunction; a short delay on the SHs’ ability to appoint a liquidator while they negotiated: [126]The outcome would have been different if P had sought a longer, or indefinite, injunction: [127]___Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform!www.gravamen.com.au

www.gravamen.com.au“We need the Court’s help to call a meeting of the company!”___P sought s249G orders to call a members meeting of a Co, D1, to consider certain special resol’ns. D4 opposed the application. (D4 was a director of D1, D2, and D3.): [1]D1, and the parties generally, were part of a larger corporate group: [2]D2 held 599 of the 600 issues shares in D1. D3 held the other share in D1: [3]P, D4, and another were the dirs of D2: [2]P and D4 were the dirs of D3: [3]D1’s articles required 2 members to comprise a quorum for a general meeting. So: if either D2 or D3 was absent an EGM of D1 could not proceed: [3]The parties litigated a dispute regarding P’s status as director of D3. D4 appealed. D4’s appeal was heard and judgment reserved at the time of these proceedings. (During which, it became common ground that the outcome of the appeal would have no moment in this application.) [8], [19], [22]In January 2025, P convened a board meeting of D2 to consider causing an EGM of D1 to vote on causing the removal of D4 as a dir of D1: [9]On 3 February 2025, D2’s board resolved to cause D2 to convene an EGM of D1, over D4’s objection: [10]Later, P and D4 discussed causing D3 to attend the D1 EGM and disagreed, with D4 resisting: [11]D4 resisted P’s causing of a D1 EGM on the basis it would “cut across” the appeal outcome: [12], [13]On 26 February 2025 the would-be EGM of D1 was dissolved as inquorate: [14]P commenced these proceedings, and D4 continued to resist allowing the D1 EGM to proceed before the appeal judgment was handed down: [15] - [18], [21](As noted: the parties came to accept the appeal would not have any bearing on the proposed EGM: [22])The P had to (i) show it was impracticable to call the meeting without the Court’s help and (ii) move the Court to exercise its discretion in favour of relief: [26] - [31]The Court accepted that a deadlock existed in relation to P seeking to cause a quorate meeting to proceed and D4 being unwilling to cause D3 to attend the proposed EGM; and opposing the appointment of a representative of D3 to do so: [32] D4 maintained that they opposed the EGM and / or the appointment of a representative of D3 until the determination of the appeal: [33]D4 argued holding the meeting “post-appeal” was a workable outcome: [35], [36]The Court did not accept that its discretion ought to be exercised as D4 proposed because: (i) the appeal outcome had no moment on the EGM issue, (ii) the Court’s discretion ought to be exercised in the context of the current position and not what might happen in future, (iii) D4’s retained an ability to change their position after this litigation, and (iv) D4’s concerns could be addressed by other applications: [40]The Court made orders largely in accordance with those sought by P, including costs: [48], [49]

“That loan was for a purpose. Pay it back!”___P sued natural persons and Cos. D1 was not served and D2 was bankrupt, leaving P to pursue Cos only: [9]P’s dad spoke with D1 and D2 about an investment. P later transferred $9.2m to one of the DCos: [3], [5]There was no written agreement: [6]In 2017, all agreed the $9.2m would be used for property investment, that if the property bought was then sold in a year 35% would be returned, and if unsold the funds would be returned: [6]In 2018, when the principal was not returned, the parties made a loan agreement, requiring repayment and interest: [8], [61]Repayments were not made. P sued: [9]P said the money was advanced to buy a specific property; and so was held in a purposive “Quistclose” trust. P said the money transferred to the other Cos was done with knowledge and so was recoverable: [11]The Ds denied a trust and said if there was one, then the loan agreement extinguished it: [12]The Ds served no evidence: [15]P had to prove the 2017 agreement, WITH a mutual intention that the funds would be used for a specific purpose, to be held on trust and returned if the purpose was not achieved: [21]P never discussed the proposed sum, proposed property or properties, location, or property size: [24]P said some docs sent after P’s dad’s the discussion were a representation that the money would be used for specific land: [29] - [31]There was no evidence of the purchase price being referable to specific properties or of any intention to purchase a specific property: [32] - [34]In this case, there was no intention to create a trust: [36], [41], [48], [54]That’s because: the creation of a JV vehicle did not prove a trust creation intention [49], the potential of co-mingled funds absent a “trust account” points away from a trust [50], absence of language like “solely” or “exclusively” [51], and the parties treated the funds as loaned rather than held in trust [53]The Court then considered IF there was a trust, was it brought to an end by the loan agreement: [55]The Court held the loan extinguished the trust rights (if any) because (i) the loan came after and was inconsistent with a trust, (ii) the loan showed the parties abandoning the earlier agreement, and (iii) the loan’s operation saw existing rights surrendered in exchange for additional terms secured under the loan: [65]The Court then considered the position if (a) there was a trust, and (b) that trust survived the loan: [68]Even if both criteria were met, the Court found no basis to order recovery against the DCos: [69] - [109]P’s claim failed. Costs followed the event: [110]___Please follow James d'Apice, Gravamen, and Coffee and a Case Note on your favourite platform!www.gravamen.com.au

This is probably my favourite podcast to appear on as a guest! Another great discussion with Jordan and Nathan about life, branding, Drake v Kendrick, hourly rates, touch football results, and how to chart a principled path in professional services.Enjoy!You can find Jordan's and Nathan's pod here: https://podcasts.apple.com/au/podcast/challenge-the-standard-in-financial-advice/id1725733771Nathan's site: https://www.nathanfradley.com.au/Jordan's site: https://www.planningsolo.com.au/www.gravamen.com.au

As part of a series of three talks together, James d'Apice recently joined eminent senior junior barrister Jonathon Dooley of Greenway Chambers to discuss the law of Corporate Oppression.This is Jonathon's and James' first talk about the big ticket items when advising your shareholder clients whether they want to *stay* or whether they want to *go*.The three talks they gave on this topic were:1. Corporate oppression (this talk!)2. Derivative actions (to be released in future)3. Just and equitable winding up (to be released in future)Hope this one brings you some value. As you may be able to tell, James and Jonathon had good fun presenting!___Jonathon's profile can be found here: https://www.greenway.com.au/jonathon-dooley/BenchmarkTV's website is here for all of your CLE needs: https://benchtv.com.au/And of course, James' firm Gravamen has its website is here: www.gravamen.com.au

"You need to show good faith to sue on the Co's behalf!"___A sought to bring a derivative suit on behalf of TCo. TCo was trustee of a trust. A was a principal benef of the trust: [3]Pursuant to the trust deed, absent a resol from TCo the trust’s income would be paid to the trust’s principal benefs: [3]From 1988 to 1994 A was a director of TCo: [3]Broadly, as former director A sought to bring a claim on TCo’s behalf re a 2005 transaction that saw the Rs (or entities related to them) acquire valuable land. A claimed the opportunity to acquire that land was TCo’s and the Rs breached their duties to TCo by directing that away from TCo: [4]At first instance A was denied leave on the basis the application was not brought in good faith: [5]A appealed.The Rs resisted on the basis of a previous judgment of the CoA, relevant real property law, and a statute bar: [23]A said that the previous judgment (which required a link between the status an applicant relies on, and the loss they seek to vindicate for the company) added a gloss on the s237 criteria. A also said the evidence weighed in their favour: [24]What amounts to “good faith” is context dependent: [29]The right to bring a derivative action is granted to vindicate a right of the company. An application made for another reason it is not made in good faith: [31]If there is no connection between an applicant’s capacity and the loss alleged, it is difficult to find an application was brought in good faith: [32]The greater the lapse in time between an applicant occupying the relevant role, and the application, the more difficult it is to prove good faith: [32]Crucially, if an applicant, relying on their status as director, seeks to bring an action on behalf of trustee company where they are beneficiaries of the trust they will need to prove they are attempting to advance the interests of the company itself, and not merely their interests as a benef: [35]Unexplained delay may suggest ulterior purpose. A genuine application to vindicate the company’s rights might be expected to be brought as soon as the applicant is aware of a claim: [36]The CoA found A was attempting to advance their interests as benef, and not TCo’s interests because: (i) A took no steps at the time of the relevant transaction, (ii) A did not adequately explain their delay, (iii) A has separately commenced proceedings in their capacity as benef suggesting A is more interested in their rights than TCo’s, and (iv) A has had no connection with TCo for many years providing a “compelling” reason to find the application was not brought to vindicate TCo’s interests: [38]The Court dismissed A’s appeal. Costs followed the event: [39] - [41]___Thanks for reading! Please head to www.gravamen.com.au to learn about my firm, and look for James d'Apice, Gravamen, and Coffee and a Case Note on your favourite platform!#gravamen #auslaw #coffeeandacasenote

“Repay that tax refund into the trust!”___P was a Unit TeeCo incorporated by D1. D3 (whose sole dir and s/holder was D1) was the sole unitholder. D2 was D1’s spouse: [1] - [3]D1 incorporated P to buy a valuable piece of land (“Property”). P borrowed the funds from Lender for that: [4]After completion, D1 caused P to lodge a BAS. The resultant refund of ~$2.6m was paid to P: [5]P sued seeking repayment: [8], [10]The Ds said $1.1m of it was a “Success/Performance Fee” for D1 and $1.5m was a “Management/Performance Fee” for D1: [13]D1 was an experienced property developer whose usual practice was to incorporate SPVs (similarly to P) to exploit development opportunities: [14] - [16]Typically, as with P, the SPVs would have no funds of their own and would get third party finance: [17]Sometimes, as with P, D1 would not create a new bank account for a new SPV and would instead use D1’s own: [16], [36]In around 2022 D1 identified the Property and began speaking to the Lender: [22] - [24]A loan agreement followed and in 2023 the purchase of the Property for ~$30m completed: [25] - [30], [61]After completion the Lender realised any profit calculations were absent GST tax refunds: [59]In October 2023 the ~$2.6m GST refund was paid into D1’s account (remembering P did not have its own account): [64]Shortly after, $9m (which included the ~$2.6m) was transferred from D1’s account to the D1/D2 joint account: [66], [67]These funds were then applied to buy a $22m Bronte property in D2’s name: [69] - [71]The Lender chased D1 in relation to the GST refund position. D1 was evasive; at time dishonestly so: [72] - [83]The Lender appointed receiver managers demanding repayment of the BAS Refund to P. D1 did not comply: [87]The parties agreed D1 held the BAS Refund on trust for P: [89]D1 said the BAS Refund was then paid to D1 as fees “determined” by D1 as sole dir of P; but not pursuant to any written or oral agreement: [93]There was no evidence of an invoice, agreement, accounting entry etc. describing a fee to be paid to D1. Nor was there evidence for two types of fee: [97] - [100]There was written contemporaneous evidence against D1’s case seeing D1: (i) declaring there were no related party transactions [112] and failing to declare the purported fees in the relevant BAS: [114]The only evidence supporting the Ds’ view was D1’s affidavit. D1’s credibility was damaged by D1’s dishonesty in dealing with Lender regarding the BAS Refund: [115] - [118]The Ds failed to establish a basis for fees, those transfers therefore being a breach of trust and of DDs: [119], [120], [155]Separate claims against D2 and D3 were not successful: [145], [148]The question of costs had complexity (P’s success against D1, and failure against D2 and D3) and was saved for another day: [156], [157]___If you have made it this far please consider following James d'Apice, Coffee and a Case Note, and my firm Gravamen on your favourite platform!www.gravamen.com.au

“You can’t run that claim. You’ll expose the Co to a cross-claim!” ___ P sought, among other things, s236 leave to sue D on the Co’s behalf for $110k: [2], [3] P held 70% of the shares in the Co, and an entity related to D held 10%. The Co was no longer active: [4], [10], [25] The issue was: D caused $110K to be transferred from the Co to one of D’s entities and P said there was no authorisation for the transfer: [4] D argued the transfer was authorised by way of WeChat message: [4] The parties led “voluminous” evidence which, with respect, was of only middling assistance to the Court: [6] - [12] The heart of the dispute concerned the meaning of the WeChat exchange (which was translated to English). D proposed that an invoice be issued to their entity so that a VAT (which we infer was a reference to GST) of $10K could be recouped. P responded with an “okay” emoji: [13] D argued this was authorisation for the $110K transfer to D’s entity - that sum being $100K plus the 10% “VAT” that would apply to it: [14] The Court was then left to consider the s237(2) statutory criteria in relation to granting leave to bring derivative suits. Re s237(2)(a): noting a board deadlock, the Court found the Co was not likely to bring the proceedings: [18] Re s237(2)(b): D raised a likely quantum meruit cross-claim that would be raised if the claim was pressed [22] saying the claim was not brought in good faith. The Court assumed, without finding, P came in good faith with a genuine belief the WeChat exchange did not authorise the payment: [23] Re 237(2)(c): P failed to convince the Court it was in the Co’s best interests for leave to be granted: [34] The Court considered the likelihood that D would bring a cross-claim in quantum merit for the work D’s entity had actually done to benefit the Co: [28] D said exposing the Co to that cross-claim could not be in the Co’s best interests.The Court considered the Co contemplating proceedings would rationally contemplate the pros and cons of running the claim, including the risk of the cross-claim: [29] If the cross-claim exceeded the claim, then a rational company would not commence: [30] P did not undertake this economic benefit analysis, nor did they provide the Court with enough evidence to allow the Court to do so: [31], [32] The Court found that the $250K indemnity P offered to provide did not assist where the above analysis had not been undertaken, and where there appeared a real possibility that litigating the claim and cross-claim might expose the Co to costs orders exceeding that amount: [33] Re ss237(2)(d) and (e): both serious question and notice criteria were uncontroversial: [35], [36] The Court was not persuaded that it was (rather than *might be*) in the Co’s best interests that leave be granted: [37]Leave was not granted. The application failed. ___ Please follow me on your favourite social media and visit my firm's website www.gravamen.com.au

"Pay the trust's funds to the estate!" ___ A Tee was the trustee of a trust with about $2.8m in assets. The trust had two beneficiaries, Spouse 1 and Spouse 2: [2], [8] Spouse 1 died in 2014 bequeathing their estate entirely to Spouse 2: [2], [11] The Tee lost the trust deed: [2] While general law dictated some of the terms of the trust, having lost the trust deed the Tee has no certainty about the beneficiaries of the trust (aside from Spouse 1 and Spouse 2): [3] The Tee was incorporated in 1982 and some evidence suggesting a deed settling the trust was entered into at or around that time: [5], [6] ATO records showed the trust was used for investment activity and that it distributed income to Spouse 1 and Spouse 2, and no one else: [10] Spouse 2 died in 2022 and an interim administrator of their estate was appointed: [12] At the time of their death, Spouse 2 was sole dir and shareholder in the Tee, which was also trust of the Spouses’ SMSF: [13] An independent IP was appointed director of the Tee: [14] The IP gave evidence of numerous searches and enquiries conducted in relation to the trust deed, which did not lead to its being found: [15] This case was distinguished from usual trust deed cases (which sometimes deal with a photocopied deed, an unsigned deed, or a deed relied upon in relation to a very similar trust) noting that there was no evidence of any deed at all. Nor was there any evidence of the deed’s terms: [16] The Court found that without the deed, the trust’s benefs could not be identified meaning (without certainty of object) the trust failed. A resulting trust arose in favour of Spouse 1. Spouse 2, as Spouse 1’s benef, stood to take in those circs: [17] The Court accepted as common knowledge of the general practice that a trust deed for a “family” trust will inevitably include more members of that family than the “main beneficiaries”, typically the relevant spouses: [20, [21] Having taken judicial notice of this, the Court considered that there would be more beneficiaries of the trust than Spouse 1 and Spouse 2 but - due to the absence of the deed - there could be no certainty as to who those beneficiaries might be.Whether due to their status as (likely) settlor of the trust or the conclusion that Spouse 1 did not intend to divest themselves of the assets in the corpus of the trust then - the trust having failed for uncertainty - a resulting trust arises in favour of Spouse 1: [25] - [27] The Court advised that (Spouse 1 having died, and Spouse 2 being sole benef of Spouse 1’s estate) the Tee would be justified in paying the corpus of the trust into Spouse 2’s estate: [30] ___ Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform! www.gravamen.com.au

“Hey! You can’t transfer your shopping centre stake to them!” ____ Two contracts governed the relationship between co-owners of a large, suburban shopping centre: [1] In 2012 the co-owners were P as to 50%, and two other entities in the same group for 25% each: [2] The arrangement contained rights regarding share transfers; the breach of which allowed the non-breaching party to automatically buyout the breaching party’s stake: [5] In 2014, after some compliant share transfers, the ownership structure became 50/50: [7], [8] In 2022, following a restructure of middling complexity (to this humble litigator!), P’s co-owner transferred its shares to another entity in that group: [10], [25] - [34] Crucially the transferee (who was one of the Ds) did not fall within the relevant definition “Related Corporation”: [35] P said this transfer was a breach and triggered P’s rights to buy their co-owners out of the property: [11] The operation of the clauses dealing with transfers of interests were considered closely: [13] - [24] P and the Ds exchanged (chiefly by emails between their solicitors) corro with the Ps asserting the transfer was a Prohibited Disposal (as defined) and pressing for a sale at $830m: [40] - [54] The sale did not proceed. P commenced proceedings: [55] The Ds resisted, including on the basis of the operation of technical parts of the documents, the structure of the transactions, and the service requirements in relation to the relevant notices: [61] The Court briefly restated the principles that applied to commercial contractual construction; congruence, the avoidance of commercial inconvenience, avoiding a capricious outcome etc: [70] The Court found that the a co-owner performing a Prohibited Disposal, and thereby being in default, exposed the entirety of its interest (and not merely, say, a severable proportion) to being bought out: [95] Regarding notice, notice in writing including email was sufficient - with no additional formal or ceremonial requirement: [103], [106] From the time the Ds received the notice from their lawyers, compliant notice was provided to the Ds: [109] Further in relation to the notice question, the Court found that an estoppel contended for by P did not arise whereby giving notice to the Ds’ lawyers was sufficient to comply with the contract was not made out: [115], [116] (However, as mentioned, relevant notice requirements were complied with.) The Court found P was entitled to specific performance of the contract for P’s purchase of the relevant D’s interest in the shopping centre: [117] ___ Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform! www.gravamen.com.au

“The partnership’s book is a liability, not an asset!” ___ A and R operated an insolvency practice in partnership. Like many such businesses, it would build up “WIP” in a matter and that WIP would be paid (or not) over time: [3], [4], [6] The business was profitable: [49] In September 2014, A ended the partnership electing to go out on their own with most of the business’s book of work: [7] - [10] A number of pieces of litigation followed. Some led to orders for an account of the partnership to be taken: [5], [14] This process included the valuation of the partnership’s book *after* the September 2014 dissolution: [12] A relied on two experts: [19] The primary judge took little value from A’s experts’ evidence: [20] Further: the experts gave no evidence of market transactions [22]; it was unlikely that a purchasing IP could demand a “discount” for purchasing the book [23]; and it was unlikely an outgoing IP would pay a purchaser a “discount” sum for taking on the administrations when the outgoing IP could simply resign: [24], [25] A appealed. A did so on 5 grounds: (i) a “discount” payment might be available and so should be borne in mind in a valuation [27]; (ii) the nature of the valuation - a hypothetical sale on complicated terms - meant a criticism for a lack of evidence of similar market transactions was inappropriate [28], [29]; (iii) the judge erred in not accepting the evidence of A’s experts [30], [31]; (iv) the judge erred in finding the Court’s power to appoint a replacement IP meant a discount would never be payable [32]; (v) and a failure on the part of the judge to evaluate individually each administration to then determine whether a discount would arise: [36] The dispute put another way might be that A argued the book was a liability, where R argued it was an asset: [38] RE (i): After reviewing IPs’s professional obligations, the CoA concluded no hypothetical purchaser of the book could require or accept a “discount” payment without breaching them: [61] RE (ii): Similarly, this ground was not sufficient to disturb the primary judge’s finding: [66] RE (iii) and (iv): A’s experts failed to grapple with an IP’s ability to resign from unfunded administrations. Elaborate analysis of the evidence was not required due to this failure to address the real issues: [68], [79], [80] RE (v): a vendor would not pay a “discount” to a purchaser for buying the IP business, first, because it would be a breach of their professional obligations and, second, (noting the opportunity they have to retire) it would make no financial sense as it would be cheaper to just resign from unwanted administrations: [73] The position was similar in relation to the bankruptcy trustee appointments: [77], [78] A’s appeal was dismissed: [1], [81], [82] ___ Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform! www.gravamen.com.au