Show Notes
"Is it the tree that's held in trust, or just the fruit?"
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The Ps came to Court arguing that one D - a trustee, DTee - held shares in the other D, a Co, on trust for the Ps: [1], [3], [4]
The Ps further sough for the shares be transferred to the Ps: [2]The Co’s defence essentially put the Ps to proof - a “non admission”: [5]
DTee took a more expansive approach: [5] - [8]
After particulars of its defence were sought, DTee asserted that if the Ps were benefs of a trust including shares in the Co, the Ps were entitled only to the “benefit” of those shares (e.g. dividends and franking credits) rather than the shares themselves: [9], [14], [15]
The assets underpinning the structure related to property development: [10]
Evidence suggested the Ps had made some financial contribution, despite opacity as to the structure of the transaction: [11]
In 2023, the parties entered into Declarations of Trust: [20]
DTee pointed to evidence suggesting that a unit trust was contemplated by the parties abrogating the need for trust decs. The Court found that even if the trust decs were illogical or unnecessary, they bound the parties and would need to be considered: [18]
Dividend statements suggesting dividends and franking credits passed to the Ps were referred to, absent an explanation as to how this was possible noting the Ps were not shareholders: [19]
The trust decs and the Co’s conduct were consistent with the shares, and not merely the “benefit” of the shares, being held on trust for the Ps: [21] - [23]
That is: the corpus of the trust included the tree, and not merely the fruit of the tree: [20]
The Ps said the trust decs unambiguously referred to the shares, and now called for their transfer whether pursuant to Saunders v Vautier or the terms of the decs themselves: [25], [26]
After considering the application principles of construction, the Court founds the trust decs were clear and that (i) they extend to a trust over the shares themselves (not merely the “benefit” of them); and (ii) create a covenant to transfer the shares on demand: [29]
DTee queried whether the corpus of the trust was sufficiently certain, noting DTee held a “pool” of shares and that none of the shares in the pool could be attributed precisely to an individual P: [30], [34]
The Court disagreed, finding that a beneficiary could have a beneficial interest in a specified number of a larger parcel of shares: [31] - [34]
Having so found, the Court considered orders transferring the shares back to the Ps (whether pursuant to Saunders v Vautier or the terms of the trust decs) were appropriate: [35]
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In 2026 James had the opportunity to sit down with Ben Hudson from the Unbilled Unfiltered podcast for a wide-ranging discussion about legal practice, the lawyers James is "deeply unimpressed" by, and what role a failed rap career plays for a litigator. You can find the podcast here: https://www.unbilledunfiltered.com/
“Put me back as director and correct the share register!” ___ P sought an interlocutory injunction. P said they had been invalidly removed as Dir of a Co, and their shareholding improperly diluted: [1], [2] P said D had taken control of the Co to make it sell its business and property: [1] P helped establish the Co, contributing assets: [7](1) – (2) There was past tension between P and a former Dir (now dead) leading to D’s involvement: [7](5) – (6) In August 2026 resol’s were passed including appointing P as Dir: [7](10) Later, forms were lodged suggesting P was removed as Dir, despite not having resigned nor having been provided with notice of any meeting re P’s potential removal as Dir: [7](12) P was then excluded from the Co’s mgmt: [7](13) Evidence suggested D was in Thailand: [7](17) In Sep 2026, P visited the Co’s offices only to be told the Co’s business had been sold, with responses to some Qs being “above [the answerer’s] paygrade”: [8] (The evidence was incomplete re the progress of any potential sale: [10]) P’s lawyer tried to inspect the Co’s books and records at its agent’s office and was turned away: [9] The Court considered the relevant law noting P had to show (i) a prima facie case, and (ii) that the balance of convenience favoured relief: [3] – [5] P’s claims were broadly stated; unauthorised dealings and “unwarranted oppression”: [12] The injunction sought was to prevent the Co dealing with its business and real property: [13] The Court found it arguable that (i) P was improperly removed as Dir, and (ii) an unauthorised agreement may have been improperly made with a 3rd party to sell the Co’s business: [14], [15] Further, it was arguable that (iii) any dist’n of sale proceeds would not be in a proportion with the true shareholding in the Co: [14] 1st re balance of convenience: there was a prospect of a sale completing and proceeds flowing to D out of jurisdiction, radically altering the status quo: [15] 2nd re BoC: even though the orders might complicate a possible sale and the Co’s mgmt, notice could be given to third parties and there was liberty for parties to apply – largely curing this issue: [16] The relief sought by the P was granted: [17] ___ Please follow leading partnership and shareholder disputes lawyer James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform. www.gravamen.com.au
“I own 40% of you, and I’m winding you up!” ____ The Ps sued to wind up a Co pursuant to s461(1)(k), the “just and equitable” basis. The Co opposed: [1], [4] The Ps held 40% of the Co’s shares, an SPV incorp’d for residential development: [1], [2], [157] The remaining 60% to 2 entities whose controlling minds were also Dirs of the Co: [7] – [11] The Ps referred to: apparent insolvency of the Co, a breakdown of relationships, and “exorbitant” mgmt fees “gouged” by an entity related to 2 of the Co’s Dirs: [3], [149] – [151] In 2021 the Ps and the Co had entered into an arrangement where the Ps loaned ~$5m for buying the property, to be repaid from profits following development: [12] In December 2021, the Co bought the property for ~$10m; funded in part by the Ps’ loan: [13] – [15] The Dirs of the Co incorp’d OtherCo to provided management services to the Co; $30K per month. The Ps were not told of this: [16] – [20] From 2022, the Co undertook various steps (including running NSWLEC proceedings) to obtain relevant DAs: [21] – [28] Rent was collected on the Co’s property from 2022. It was not paid to the Co but was paid to OtherCo: [29] – [31] The Ps initially sued seeking repayment of the $5m. They lost: [32] – [34] The Ps took the view the development was “unviable”; likely unprofitable. The Court accepted this: [43], [95] The Ps’ experts’ figures suggest the development would be worth $22m, for a cost of $35m; a loss of ~$13m: [45] – [88] The Court accepted there was no possibility of the Co obtaining external finance: [110], [158] Nor was it likely finance could be obtained from a related party: [117] The Court noted insolvency may be relevant to a just and equitable wind up application: [118] After extended considering of the relevant tests for insolvency, and with the assistance of expert evidence, the Court accepted the Co was likely cash flow and balance sheet insolvent: [148] The Court lacked confidence in the conduct of the Co’s affairs, such that it was just and equitable that it be wound up: [164] Where the Co was not run as a quasi-partnership, the fact that there was a breakdown in the relationship of trust and confidence between the parties was not sufficient to obtain a winding up order: [169] – [176] The Court found there were no alternative s 467(4) remedies: [177] – [195] The Court ordered that the Co be wound up and that the Ps’ legal costs would be costs in the winding up: [199] ___ Please look out for James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform. www.gravamen.com.au #auslaw #coffeeandacasenote #gravamen
“You breached the shareholders agreement, so transfer your shares to me!” ___ P and D were shareholders in a Co. P (who held 40%) sued D (who held 60%) alleging D’s breaches of the SHA entitled P to have D’s shares transferred to P: [1] – [4], [7] This breaches, said P, were D taking unauthorised loans and D’s granting security over its shares in the Co: [2] The Co did scaffolding work and was of some size; ~$11m annual revenue, ~55 employees: [6] The Co had developed out of a business operated by D, with P’s controlling mind acting as director and manager: [9] No party challenged the SHA’s validity. It applied: [17] D licensed its IP and provided services to the Co – for payment – over the years: [19], [20] The D’s work for the Co included, necessarily, having some control over the Co’s bank account. The D (whether by its agents or otherwise) made payments from these accounts: [21], [22] Over time a loan balance grew. By 2025 D was indebted to the Co for ~$1.9m: [23] – [27] P’s consent was not sought for the advances that led to this balance. i.e. they were made without P’s approval: [28] In 2025 an insolvency risk loomed for D. It missed some superannuation payments owed to its employees: [29] P issued D a default notice pursuant to the SHA in relation to the loan balance. D accepted the notice was properly issued [30] – [36] The issuing of the notice commenced the SHA’s default sale process: [34] In 2022 D had granted a security of all of its assets (i.e. including its shares in D): [37] In 2025 P discovered the security via a PPSR search conducted as part of prep for P acquiring D’s shares: [39] Shortly after this discovery, P issued a security default notice pursuant to the SHA: [40] Although the breach was remedied after the notice was issued, P had commenced the default sale process beforehand: [41] – [46] Despite D’s contrary assertion, the commencement of other legal proceedings by the Co was not a termination of the SHA – and even if it was, P’s rights pursuant to the default notices survived: [47] – [48] The Court then considered whether specific performance was the appropriate remedy. The remedy of specific performance is discretionary: [49] Damages were an inadequate remedy for the P’s loss. Prima facie: spec perf should be ordered for breaches concerning shares in a private Co: [54] D argued that the SHA had a valuation method, enabling damages to be quantified. The Court disagreed finding the control premium would not be accounted for with that method: [55] – [57] D tendered no evidence of its capacity to remedy the defaults: [62] No hardship issues stood in way of the Court exercising its discretion to order spec perf: [78] P was entitled to spec perf of the share transfer: [79] ___ Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform. www.gravamen.com.au
In July 2026, James has an opportunity to sit down with Hall & Wilcox partner and host of the Hall & Wilcox podcast "What's in a name?" to talk about diversity, inclusiveness, and using one's privilege for the benefit of all. You can find the original podcast here: https://hallandwilcox.com.au/news/cultural-inclusion-conversations-whats-in-a-name-season-2/