Li v Ye

1. [1]

   The parties are shareholders in what I will call the Shield Group of companies. The Shield Group is involved in a timber business, operating out of Queensland and South Australia.

2. [2]

   The principal protagonists are the first plaintiff, Ms Xuxu Li, the second plaintiff, Ms Li’s husband, Mr Kevin Waters-Marsh, and the third plaintiff, Mr Xiaosi Qian, on the one hand, and the first defendant, Mr Feng Ye, on the other. During the hearing, the parties adopted the convention of referring to these individuals by the given names by which they are known: Suzie, Kevin, Robin and Thomas respectively. I will do the same.

3. [3]

   A chart showing the various members of the Shield Group, and how Suzie, Kevin, Robin and Thomas and their related corporate entities, as well as other entities, hold their shares, is attached. The document also shows of which companies the individuals are directors. Annexure 1 - Share Structure Diagram

4. [4]

   During the hearing, attention focused on eight of the Shield Group companies:

   1. (1)

      Shield Resources Pty Ltd (“Shield Resources”), the fourth defendant;

   2. (2)

      Shield Hardwood Pty Ltd (“Shield Hardwood”), the seventh defendant;

   3. (3)

      Shield Holdings South Australia Pty Ltd (“Shield Holdings South Australia”), the sixth defendant;

   4. (4)

      Shield Formply Australia Pty Ltd (“Shield Formply”), the third defendant;

   5. (5)

      Shield Holdings Australia Pty Ltd (“Shield Holdings Australia”), the fifth defendant; and

   6. (6)

      three subsidiaries of Shield Holdings Australia, that is:

5. [5]

   A document showing the shareholding in those companies, and their operations, is attached. Annexure 2 - Shareholding Table

6. [6]

   Thomas is a director of each company in the Shield Group. Through his company, Thomas Gem Stone Pty Ltd, the second defendant (“Thomas Gem Stone”), Thomas holds the majority of shares in each company. Thomas said that he “was educated at Xiamen University in Economics” and that he “worked for [the] government of the PRC in the administration and management of timber resources from about 1991 to 1998, before going into business for myself”.

7. [7]

   He deposed that:

8. [8]

   It was Thomas who established the business conducted under the name Shield.

9. [9]

   Thomas has been a permanent resident of Australia since 2003 and an Australian citizen since 2005. He is not proficient in the English language but fluent in Mandarin. He gave his evidence before me through an interpreter.

10. [10]

    Suzie has been since July 2016, and is, employed as the Chief Executive Officer of the Shield Group. She holds, either personally or through one of her companies, including Mana Assets Management Pty Ltd, the fourth plaintiff (“Mana Assets”), shares in each company. She is also a director of most of the companies in the Shield Group. Suzie holds a Bachelor of Commercial Law from the China University of Politics and Law, a Graduate Certificate of International Business from the University of Wollongong and a Master of Commerce from the University of Sydney. Suzie has lived in Australia since she emigrated from China in 2000. In 2007 and 2010, Suzie established businesses, separate from the Shield Group, providing migration advice services. Suzie is bilingually fluent in both spoken and written English and Mandarin.

11. [11]

    Kevin is Suzie’s husband. Kevin contends that he is the Chief Operating Officer and Workplace Health & Safety Officer of the Shield Group. He played the role of Chief Operating Officer in the Shield Group from at least October 2022 to early 2024.

12. [12]

    Robin has been since 2017, and is, employed as the Chief Financial Officer of the Shield Group and holds, through his company, XCQ Holdings Pty Ltd, the fifth plaintiff (“XCQ Holdings”), shares in Shield Holdings Australia. He is also a director of that company and certain other companies in the Shield Group. Robin is a qualified accountant. He holds a Diploma in Accounting from Chang Chun Finance College in China. He worked in China as an accountant up to 2008. He immigrated to Australia in 2008 and has worked as an accountant here since then. Robin is also bilingually fluent in both spoken and written English and Mandarin.

13. [13]

    Each of these individuals presented as being confident of the importance of their contribution to the fortunes of the Shield Group and, as between Thomas on the one hand and Suzie, Kevin, and Robin on the other, dismissive of the contributions of the other. Much was said during submissions about the credit of each of these individuals and how they presented when giving their evidence. For the most part, I am able to resolve the disputes between them and determine the outcome of the proceedings without reference to such matters.

The claims in the proceedings

1. [14]

   Suzie, Kevin and Robin (together, the “Plaintiffs”) bring a number of claims against Thomas.

2. [15]

   As articulated in their Amended Commercial List Statement, Suzie and Robin claim that they have been oppressed in the manner proscribed by s 233 of the Corporations Act 2001 (Cth) (the “Act”) by Thomas’s conduct in allegedly:

   1. (1)

      failing to agree, as Thomas is said to have represented he would, on a “fair” redistribution of shares in the Shield Group having regard to Suzie’s and Robin’s contributions to the business;

   2. (2)

      seriously mismanaging the construction of the sawmill located on a property at Nangwarry in South Australia owned by Shield Holdings South Australia (the “Nangwarry Property”);

   3. (3)

      engaging in various acts said to be attempts to “remove or diminish” Suzie;

   4. (4)

      diverting the funds of various companies in the Shield Group for his own benefit;

   5. (5)

      refusing to pay monthly payments due under a loan of $4.8 million from Judo Bank Limited to Shield Formply;

   6. (6)

      refusing to pay Suzie, Robin and Kevin arrears of salary and entitlements and refusing to repay loans advanced by Suzie and Robin to various companies in the Shield Group.

3. [16]

   Suzie also makes a number of claims in relation to a property at Chinchilla in Queensland (the “Chinchilla Property”) which is registered in the name of Thomas Gem Stone.

4. [17]

   Suzie and Robin seek:

   1. (1)

      orders that Thomas and Thomas Gem Stone transfer to them and their associated companies:

   2. (2)

      a declaration that the Chinchilla Property is held on trust for Shield Resources and consequential orders including that it be transferred to Shield Resources;

   3. (3)

      an order that Thomas be removed as a director of each of the companies in the Shield Group;

   4. (4)

      an order rescinding a resolution of Shield Holdings Australia made on 12 September 2023 pursuant to which family members of Thomas were appointed directors; and

   5. (5)

      orders that Thomas “repay” monies to certain companies in the Shield Group.

5. [18]

   Suzie, Robin and Kevin seek judgment against Shield Resources and Shield Intermodal for unpaid salary and superannuation.

6. [19]

   Suzie, her associated company, and Robin seek judgment against a number of Shield Group companies in respect of funds advanced by way of loan.

The wider background

1. [20]

   All of these claims must be seen against the wider background that:

   1. (1)

      the relationship between the parties has irretrievably broken down;

   2. (2)

      the Shield Group is, if not actually insolvent, close to insolvency;

   3. (3)

      Thomas has, since November 2023, been excluded from any management role in the Shield Group;

   4. (4)

      none of the companies in the Shield Group has a functional board of directors; and

   5. (5)

      the affairs of the Shield Group are presently being conducted by the minority shareholders, Suzie and Robin, who have excluded Thomas from any management role, and who seek to have Thomas transfer to them his shares so they can somehow trade out of the Shield Group’s present financial state.

The principal Shield Group entities

1. [21]

   Before considering the various claims made in the proceedings, I will outline the role of the principal Shield Group entities.

2. [22]

   Shield Resources conducts a softwood log export business using a facility in Bordertown and the Nangwarry Property in South Australia.

3. [23]

   This was the company in association with which Thomas and Suzie first conducted a timber business together. They started working in this way in 2016 having known each other previously through a series of unrelated activities. Thomas suggested to Suzie that they work together on a business that would manufacture timber veneer in Australia, export it to China to be used to manufacture formply, a timber composite used by concreters for formworking, with such formply then being imported into Australia for sale here. Thomas had an interest in a factory in China that made formply. He had previously imported formply from China to Australia.

4. [24]

   Thomas and Suzie agreed that they would be directors and make decisions together, that Suzie would be the Chief Executive Officer on a salary of $150,000 per annum and have an initial 4% shareholding; 2% held in Phoenix Group Australia Pty Ltd (“Phoenix Group Australia”), a company associated with Suzie and Kevin, and 2% held by Thomas for her.

5. [25]

   Suzie’s initial 4% shareholding increased to 6% in 2019, evidently in recognition of the role she was playing in the company, and then to 30% in 2022 in recognition of her role in securing funding to refinance the purchase by Shield Holdings South Australia of the Nangwarry Property, where a sawmilling operation is currently to be carried out.

6. [26]

   Thomas, through Thomas Gem Stone, now holds 69.5% of the shares in Shield Resources and Suzie, through Mana Assets, holds 30%. A non-party, evidently supportive of Suzie’s position, Awake (K&T) Pty Ltd (“Awake”), holds the remaining 0.5%.

7. [27]

   Shield Resources has been supported financially in two ways. First, it is supported by loans from external parties which were organised when Thomas was not able to locate funding. One of those parties is Mr Yuping Zhong who in December 2023 obtained a judgment for $1.5 million against Shield Resources. [2] That judgment, and a further amount due to Mr Wang Yang of $3 million, has not been repaid.

8. [28]

   Second, Shield Resources has been supported by Suzie and Robin through the provision of loan funds. Suzie contends that she is owed some $1.3 million and Robin contends he is owed some $2.36 million as well as an amount in the order of US$1.6 million.

9. [29]

   Shield Hardwood is the operator of a hardwood timber export business carried out at the Chinchilla Property.

10. [30]

    In 2018, Thomas Gem Stone acquired the Chinchilla Property from which Shield Hardwood now conducts this business. There is controversy about the circumstances in which this acquisition took place. I refer to this below. [3]

11. [31]

    Thomas, through Thomas Gem Stone, holds 94% of the shares in Shield Hardwood. Phoenix Group Australia holds the balance of 6%.

12. [32]

    Shield Holdings South Australia is the owner of the Nangwarry Property from which Shield Resources carries out the softwood timber export business. Its function is to hold that property.

13. [33]

    Thomas, through Thomas Gem Stone, holds 69% of the shares in this company. Suzie, through Mana Assets, holds 30% of the shares and Awake holds the balance of 1%.

14. [34]

    It was Suzie’s role in procuring the refinancing of the loan taken out by Shield Holdings South Australia to purchase the Nangwarry Property that led to her shareholding in Shield Resources being increased from 6% to 30% in 2022.

15. [35]

    Shield Formply was once used by Thomas to conduct the formply import business to which I have referred. [4]

16. [36]

    It is now the borrower of funds that have been used to finance the operation of the South Australian softwood timber export business, and is currently indebted to Judo Bank in the sum of $4.8 million.

17. [37]

    Thomas currently holds 70% of the shares in Shield Formply, with Suzie and Robin holding 20% and 5% of the shares respectively. Ms Rita Zhou holds the remaining 5% of shares.

18. [38]

    Shield Holdings Australia was incorporated on 9 May 2023 at a time when the parties were contemplating the “restructure” of the Shield Group to which I will return. [5]

19. [39]

    Shield Holdings Australia is the ultimate holding company of:

20. [40]

    Thomas, through Thomas Gem Stone, holds 64% of the shares in Shield Holdings Australia, and thus, in effect, the three companies referred to in the preceding paragraph. Suzie, through Mana Assets, holds 20% and Robin, through XCQ Holdings, holds the remaining 16%.

The parlous state of the Shield Group

1. [41]

   All parties agree that the relationship of trust and confidence that hitherto existed between Suzie, Kevin and Robin on the one hand, and Thomas on the other, has broken down.

2. [42]

   Thus, in their closing submissions, Mr Elliott SC and Mr Goodyear, who appeared for the plaintiffs, accepted:

3. [43]

   Because of that breakdown in relations, none of the companies in the Shield Group has a functional board of directors.

4. [44]

   There is also an issue as to the solvency of companies in the Shield Group.

5. [45]

   In that regard, the parties’ submissions focused on the question of the solvency of Shield Resources.

6. [46]

   Shield Resources is the principal trading company in the Shield Group and, as I have said, exports softwood from South Australia, manages the lease agreement for the Bordertown facility, and manages the operational machinery in South Australia. It also employs all staff for the Shield Group, apart from in Queensland. Mr Elliott and Mr Goodyear submitted that Shield Resources “plays an integral part in the operations of the Shield Group” and is the “face of the Shield Group”.

7. [47]

   A company is “solvent if, and only if, [it] is able to pay all [its] debts, as and when they become due and payable”. [6] If Shield Resources does not meet that definition, it is necessarily insolvent. [7]

8. [48]

   Mr Elliott and Mr Goodyear pointed to the recent summary by Black J of the principles concerning insolvency in In the matter of Pacific Plumbing Group Pty Ltd (in liq). [8] His Honour said the relevant test:

9. [49]

   In relation to the arrangements between the company in question and “prospective lenders”, Black J said in In the matter of Custom Bus Australia Pty Ltd (in liq): [12]

10. [50]

    So far as concerns Shield Resources, in closing oral submissions Mr Elliott accepted that “[t]he solvency question ultimately turns on your Honour’s view about the $12 million facility that [Suzie and Robin] have obtained”.

11. [51]

    Mr Elliott was referring to a “Facility Agreement” dated 1 June 2024 expressed to be between Mana Assets as borrower and Mr Zhongping Huang and Ms Jia Zhaou as lenders, according to the terms of which Mr Huang and Ms Zhaou have agreed to lend Mana Assets $12 million.

12. [52]

    The Facility Agreement is dated 1 June 2024; the Saturday before the hearing of these proceedings commenced. Suzie said that she had first approached the lenders on 30 or 31 May 2024; the Thursday or Friday before the hearing commenced.

13. [53]

    According to the terms of that Facility Agreement, the lenders have agreed to make available to Mana Assets a “facility” of $12 million to be applied by Mana Assets “for the purpose of the operational funding needs of the Shield Group from time to time” and for an “availability period” of five years.

14. [54]

    An interest rate of 10% per annum is specified, but this is subject to cl 9 which provides:

15. [55]

    Thus, according to the terms of the Facility Agreement, the advance of $12 million is interest free unless the lenders decide otherwise.

16. [56]

    The Facility Agreement makes no provision for security.

17. [57]

    In cross-examination, Suzie said that:

18. [58]

    The terms of the Facility Agreement are extraordinarily generous; a five year $12 million loan without security and, absent a contrary decision by the lenders, interest free.

19. [59]

    Mr Elliott and Mr Goodyear submitted that, in his cross-examination of Suzie, Mr Kelly SC, who appeared with Mr Maroya for the Defendants, did not put to Suzie that the 1 June 2024 Facility Agreement was not a genuine document, nor that it did not reflect an actual agreement made between Mana Assets and the named lenders.

20. [60]

    Mr Elliott and Mr Goodyear submitted that it was only in relation to the question of the lenders showing their bank statements to Suzie that any challenge about the 1 June 2024 Facility Agreement was made; when Mr Kelly asked Suzie “[a]re you sure you’re not making this up as you go along?”, in response to which Suzie said, “I’m not making it up”.

21. [61]

    However, a fair reading of Mr Kelly’s cross-examination of Suzie as a whole on this topic makes clear that, in asking the rhetorical question set out in the preceding paragraph, he was seeking to cast doubt on all of Suzie’s evidence about the 1 June 2024 facility; including whether the Facility Agreement truly reflected an agreement by the putative lenders to make the advance described in the document.

22. [62]

    Although those lenders were apparently present in Sydney and available to give evidence confirming their preparedness to make the advance, they were not called, from which state of affairs I draw the inference that they were not able to give evidence supportive of the Plaintiffs’ case.

23. [63]

    That does not, of course, prove that the Facility Agreement is a sham but, overall, I entertain grave disquiet as to its true status.

24. [64]

    I think Mr Kelly and Mr Maroya put the matter fairly when they submitted:

25. [65]

    Suzie said that Mana Assets will advance the $12 million it borrows from these lenders to Shield Resources, albeit conditionally, as I discuss below. [15]

26. [66]

    The other funds that Suzie and Robin contend are available to Shield Resources comprise:

27. [67]

    The funds that Suzie or Robin, through their companies, could make available to Shield Resources are not available unconditionally.

28. [68]

    Thus Suzie deposed:

29. [69]

    Robin gave evidence to similar effect.

30. [70]

    In cross-examination, Mr Kelly asked Suzie about a judgment entered against Shield Resources in favour Mr Yuping Zhong of $1,151,465.06 by Fagan J on 18 December 2023. [16]

31. [71]

    This exchange occurred:

32. [72]

    I understand from this evidence, and in particular the passages that I have emphasised, that Suzie’s position is that she would be prepared to cause Mana Assets to advance funds to Shield Resources if, but only if, she is successful in these proceedings in obtaining an order for the compulsory transfer by Thomas of his shares in the Shield Group in general, and Shield Resources in particular.

33. [73]

    Both sides adduced expert evidence in relation to the solvency of Shield Resources.

34. [74]

    Suzie, Robin and Kevin relied upon a report from Mr Scott Kershaw of 21 June 2024.

35. [75]

    Thomas relied upon a report from Mr Alan Walker of 19 June 2024 together with a “Solvency Report Memo” that Mr Walker prepared on 24 June 2024 which provides a summary of the “agreed and disagreed position” between the two experts.

36. [76]

    Although time was allocated during the hearing for cross-examination of these experts, neither expert was cross-examined.

37. [77]

    In his Solvency Report Memo, Mr Walker said that the following matters were common ground:

38. [78]

    Mr Walker opined that Shield Resources is insolvent.

39. [79]

    Mr Walker pointed to the general indicators of insolvency in the ASIC Regulatory Guide 217 [17] and concluded that six of those indicators were present, namely:

40. [80]

    Mr Walker pointed out that “the company has previously been funded by shareholder loans and deferral of employee entitlements” and that both Suzie and Robin “have demanded the repayment of their loans in October 2023 and April 2024 respectively”. Mr Walker also expressed scepticism as to the 1 June 2024 Facility Agreement and, evidently, did not take it into account when concluding “I do not consider that the company will be able to raise sufficient funds to meet its liabilities as and when they fall due”.

41. [81]

    On the other hand, Mr Kershaw assumed that the $12 million referred to in the 1 June 2024 Facility Agreement was available to Shield Resources and that the employee entitlements of Suzie, Kevin, Robin and Thomas, asserted to be in the order of some $3.1 million in total, were not due and payable.

42. [82]

    Mr Kershaw stated that he had not been provided with all the information necessary for him to express an opinion as to whether Shield Resources was solvent. Included in the missing information to which Mr Kershaw referred were finalised and signed financial statements for FY23, management accounts for FY24, integrated financial forecast models for FY25 to FY29 and management’s underlying calculations and assumptions to support these forecasts.

43. [83]

    On that basis, Mr Kershaw reached these somewhat tentative conclusions:

44. [84]

    On 6 October 2023, Robin, as Chief Financial Officer, sent Suzie and Thomas an email attaching a document entitled “Shield Debt Amounts as of 6 October 2023”.

45. [85]

    One of the debts recorded was to an entity described as “Vcoco” for $11.5 million.

46. [86]

    That entry appeared to relate to another document known as the “Vcoco Trust Account Ledger” or the “Vcoco Family Trust Ledger” which, as Mr Elliott and Mr Goodyear accepted in their closing written submissions, “at first blush … looks like a ledger recording investments that Vcoco did in fact make”.

47. [87]

    Nonetheless each of Suzie and Robin gave evidence that, although Vcoco was initially interested in investing in the Shield Group, no investment was ever made.

48. [88]

    However, on the face of it, the Vcoco Trust Account Ledger suggests that, as at 8 June 2023, Vcoco (whoever that is) had advanced $5,729,430 to one or other Shield Group entity, including substantial sums in cash and that, on one reading of the document, a further $6 million was to be invested.

49. [89]

    In his affidavit, Robin said that:

50. [90]

    Mr Elliott and Mr Goodyear submitted:

51. [91]

    The matter does not seem to be as simple as this.

52. [92]

    The Vcoco Trust Account Ledger appears to suggest that, as at 8 June 2023, “Vcoco” had advanced to one or other Shield Group entity $5,729,430. Robin’s 6 October 2023 document records an indebtedness from the Shield Group to Vcoco of $11.5 million.

53. [93]

    Robin gave this evidence in response to my questions concerning the Vcoco Trust Account Ledger:

54. [94]

    On 29 September 2023, Suzie sent an email to Robin and Thomas suspending discussions in relation to the proposed “restructure” of the Shield Group. I will return to this subject below. [19] For present purposes, the point is that Suzie said in this email:

55. [95]

    Robin replied to the email, several hours later, saying “confirmed and agreed”.

56. [96]

    Robin gave this evidence in relation to the arrangement suggested in Suzie’s email:

57. [97]

    Robin then gave this evidence in answer to questions from me:

58. [98]

    Robin then gave evidence that what was evidently proposed was a change whereby the Shield companies were no longer liable to the original investors, Robin’s “friends”, but would be liable to Robin.

59. [99]

    Thus, he gave this evidence:

60. [100]

    Robin produced a series of letters, all dated 2 May 2024, by a number of persons with Chinese names which purport to be an assignment of those persons’ entitlements against various companies in the Shield Group to Robin.

61. [101]

    None of those persons was called.

62. [102]

    Otherwise, as Mr Kelly and Mr Maroya pointed out in their closing submissions, Suzie and Robin have led no evidence to prove the existence or terms of any particular loan by any particular investor to any particular company in the Shield Group so as to establish any underlying indebtedness capable of being assigned or otherwise dealt with by way of the arrangement that Robin described.

63. [103]

    Thomas gave this evidence:

64. [104]

    This evidence bespeaks a most unsatisfactory state of affairs concerning the financial records of the Shield Group.

65. [105]

    The present position is that Shield Resources does not have the benefit of the facility purportedly represented by the 1 June 2024 Facility Agreement that Suzie has said Mana Assets would make available assuming she were to achieve success in these proceedings; that is, assuming that I were to order that Thomas transfer his shares in the Shield Group companies to Suzie and Robin in the manner I have set out above. Further, the present position is that Suzie, Robin and Kevin have demanded that the monies they contend are due to them, being the loans and unpaid salary, be paid.

66. [106]

    Mr Kershaw’s tentative opinion that Shield Resources is solvent is made on the assumptions that Mana Assets will be able to draw on the $12 million under the 1 June 2024 Facility Agreement, and on-lend that sum to Shield Resources, and that the shareholder entitlements of some $3.1 million are not due and payable.

67. [107]

    As I have said, I have grave reservations about whether any funds are available to Mana Assets by reason of the 1 June 2024 Facility Agreement. In any event, Mana Asset’s preparedness to advance any such funds to Shield Resources is conditional in the manner I have described; suggesting that, at the moment, Shield Resources is likely insolvent.

68. [108]

    The position might be different were I to order that Thomas transfer his shares in the Shield Group companies to Suzie and Robin and were Mana Assets to draw on the $12 million under the 1 June 2024 Facility Agreement and on-lend those funds to Shield Resources. But even then, and assuming the correctness of the very tentative conclusions that Mr Kershaw has expressed, it is by no means clear to me that Shield Resources could continue to trade solvently.

69. [109]

    Suzie has described her ambitions in this regard as follows:

70. [110]

    And further:

71. [111]

    Similarly, Robin has deposed:

72. [112]

    As Mr Kelly and Mr Maroya pointed out, there is no evidence before me about the content of the “robust plan” that Suzie said she and Robin had “developed”. There is no evidence of any cash flow projections or other business plan information that might cast light on whether the “plan” is viable.

73. [113]

    And the “plan” must depend on Mana Assets drawing down the funding referred to in the 1 June 2024 Facility Agreement. Further, assuming the lenders to Mana Assets did charge interest at the rate specified in the Facility Agreement, 10% per annum, it is not clear how Shield Resources could service such interest: $1.2 million annually. [20]

74. [114]

    Suzie’s and Robin’s “plan” thus raises the spectre, assuming the establishment of oppressive conduct by Thomas and the transfer by him to them of his shareholding in the Shield Group, of them causing the members of the Shield Group to trade and incur debts in circumstances where those companies are actually insolvent, or where there are reasonable grounds to suspect that the companies are, or would become, insolvent. This would be in breach of their duty under s 588G of the Act.

75. [115]

    The Court could not, obviously, give its imprimatur to such a state of affairs.

Alleged oppression – principles

1. [116]

   Section 233 of the Act enables the Court to make an order that a company be wound up or for the purchase of any shares by any member of the company.

2. [117]

   Section 232 of the Act provides:

3. [118]

   There was no dispute about the principles to be applied.

4. [119]

   They are: [21]

   1. (1)

      The test of oppression is an objective one of unfairness. [22]

   2. (2)

      The Court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly. [23]

   3. (3)

      A director may act oppressively in the sense relevant to the operation of s 232 and yet not breach any fiduciary or other duty owed as a director. [24]

   4. (4)

      Conduct of a company’s affairs may be oppressive even though the conduct is otherwise lawful. [25]

   5. (5)

      Conduct that has the effect of paralysing a company in the operation of its business is properly characterised as conduct contrary to the interests of the members as a whole. [26]

   6. (6)

      A shareholder of 50% of the shares in a company can seek relief for oppressive conduct because they do not have control in the form of power to prevent the oppression, particularly where individual strong arm tactics are used. [27]

   7. (7)

      The Court must formulate an opinion about oppression or unfair prejudice as at the date of the institution of proceedings and the issue of relief under s 233 must be determined as at the date of the hearing. [28]

   8. (8)

      The discretion under s 233 is wide as to the appropriate remedy. [29]

   9. (9)

      The nature of the remedy chosen by the Court under s 233 will be dependent upon the conclusions drawn by the Court as to the type of oppression with which the Court is dealing and the Court will choose the remedy which is least intrusive. [30]

   10. (10)

       The aim of any order under s 233 must be to put an end to the oppression. [31]

   11. (11)

       The Court should only look to wind up an otherwise solvent company as a “last resort”. [32]

   12. (12)

       As a remedy for oppression, an oppressor can be ordered to sell their shares to the oppressed party. [33]

   13. (13)

       If an order is to be made for the purchase of shares under s 233 the task of the Court is to fix a price that represents a fair value in all the circumstances. [34]

5. [120]

   It is well settled that the expression “oppressive to, unfairly prejudicial to, or unfairly discriminatory against” is a compound expression and is concerned with “commercial unfairness”. [35]

6. [121]

   Unfairness, for the purpose of s 232, is “assessed by reference to whether ‘objectively in the eyes of a commercial bystander, there has been unfairness, namely, conduct that is so unfair that reasonable directors who consider the matter would not have thought the decision fair’.” [36]

7. [122]

   Further, “one must take all the matters alleged together and remember that each case must be decided on its own facts because there is no such thing as oppression in a vacuum”. [37]

Alleged oppression – the “restructure”

1. [123]

   Mr Elliott and Mr Goodyear described this claim as the “backbone” of the Plaintiffs’ oppression claim.

2. [124]

   The allegation in the Plaintiffs’ Amended Commercial List Statement is that:

3. [125]

   Suzie’s evidence concerning the restructure commenced with her account of a conversation she said she had with Thomas in around 2017.

4. [126]

   At that time, Suzie had, in effect, a 4% shareholding in Shield Resources. Thomas personally, or through Thomas Gem Stone, held the remaining shares in the Shield Group.

5. [127]

   Suzie deposed that Thomas said:

6. [128]

   Suzie said that in March 2018 she had another discussion with Thomas “along the same lines” and that:

7. [129]

   Robin said that in around late 2018:

8. [130]

   As Mr Kelly and Mr Maroya pointed out, the evidence of Suzie and Robin is consistent insofar as it suggests an agreement to agree upon some future date, but is inconsistent insofar as it concerns the occasion when any such negotiation was to take place. Suzie said it was when funding for building the factory had been “sorted out”, [39] whereas Robin said it was when the Shield Group had achieved “profitability” and “investments from third parties”. The two are, obviously, very different.

9. [131]

   Suzie also deposed:

10. [132]

    Thomas agreed that there would be some kind of restructure.

11. [133]

    Thus, he gave this evidence in cross-examination:

12. [134]

    Thomas did cause Suzie’s shareholding in Shield Resources, at first through Phoenix Group Australia and then Mana Assets, to be increased from 4% to 6% in 2019 and then to 30% in 2022. As I have said, the latter increase was evidently a response to the role that Suzie played in procuring funding for the refinancing of the purchase by Shield Holdings South Australia of the Nangwarry Property, including offering her home as security and providing a guarantee for the relevant indebtedness.

13. [135]

    Suzie, through Mana Assets, also holds 30% of the shares in Shield Holdings South Australia.

14. [136]

    Suzie said that there were further discussions in September 2022. Suzie described these discussions as “the beginning of a restructuring”.

15. [137]

    Suzie said:

16. [138]

    Suzie said that she was not “happy with this suggestion”, but that:

17. [139]

    By 2023, relations between Thomas and Suzie had deteriorated. Thomas deposed that:

18. [140]

    Nonetheless, there were further talks about restructuring in 2023.

19. [141]

    In around May 2023, Suzie and Robin proposed that the shareholding in the Shield Group be split 50:30:20 between Thomas, Suzie, and Robin.

20. [142]

    On 9 May 2023, and as a part of a proposed restructure, Shield Holdings Australia was incorporated as a holding company for the Shield Group. On incorporation, its shares were held 50:30:20 by the three companies associated with Thomas, Suzie, and Robin: Thomas Gem Stone, Mana Assets and XCQ Holdings. This evidently reflected the shareholding structure that Suzie and Robin then proposed.

21. [143]

    On 22 May 2023, Thomas and Suzie had the following exchange via WeChat messages:

22. [144]

    The “two documents” to which Thomas referred in the final words of this message were a draft Securityholders’ Deed and draft Deed to Establish a “Shield Holdings Australia Trust”. The effect of these documents was to divide ownership of the Shield Group 50:30:20 between Thomas, Suzie and Robin.

23. [145]

    Suzie deposed:

24. [146]

    On 12 July 2023, Thomas, Suzie and Robin, by their companies, Thomas Gem Stone, Mana Assets, and XCQ Holdings, signed a number of documents including a Shield Holdings Australia Trust Deed and a Securityholders’ Deed which had the effect that the shares in Shield Holdings Australia, and the units in the Shield Holdings Australia Trust, [40] were held in proportions 64:20:16 for Thomas, Suzie and Robin respectively. [41]

25. [147]

    Thus, the parties did “sit down and agree” on a redistribution of shares in the Shield Group.

26. [148]

    Suzie’s and Robin’s real complaint appears to be that they were somehow “coerced” by Thomas into coming to this agreement.

27. [149]

    Suzie and Robin contend that they only agreed to the 64:20:16 ownership split because of what Mr Elliott and Mr Goodyear described as Thomas’s “threat of a nuclear option”.

28. [150]

    It was hardly that, even on Suzie’s and Robin’s account.

29. [151]

    Suzie said that in around June 2023:

30. [152]

    Robin gave evidence to similar effect.

31. [153]

    Suzie said:

32. [154]

    Robin deposed:

33. [155]

    Suzie said that, during these discussions:

34. [156]

    Thomas disputed this. He gave this evidence in cross-examination:

35. [157]

    It seems probable that Thomas, perhaps angrily, insisted that he retain a majority interest in the Shield Group. And assuming that he made the threats to which Suzie deposed, this would likely have been a concern to Suzie and Robin, as they had guaranteed and provided security for the finance over the Nangwarry Property and were vulnerable should the lender seek to exercise its powers over that security.

36. [158]

    But as Mr Kelly and Mr Maroya pointed out, Suzie and Robin are both highly qualified and experienced business people. Each of Thomas, Suzie and Robin had a high opinion of the worth of their own contribution to the Shield Group. Each was entitled to, and did seek to, drive a hard bargain when it came to negotiating the 64:20:16 split reflected in the Shield Holdings Australia Trust Deed. There was some hard bargaining. The parties came to an agreement.

37. [159]

    In any event, the unstated premise of Suzie’s and Robin’s complaint about being “coerced” into agreeing to that bargain was that it was somehow a bad bargain. It was doubtless less favourable to Suzie and Robin than the 50:30:20 split that they proposed. It involved some dilution of Thomas’s equity in the Shield Group. But the evidence does not enable me to conclude that a 64:20:16 split was not in range of what was “fair”. The result has not been shown to be so commercially unfair to amount to oppression.

38. [160]

    On 12 September 2023, Thomas convened a meeting of shareholders of Shield Holdings Australia to consider a motion to appoint “three additional directors”, being his wife and two family members.

39. [161]

    The motion was carried, over Suzie’s and Robin’s objections.

40. [162]

    I deal with this below, under the heading “Alleged oppression – attempts to remove or diminish Suzie”. [42]

41. [163]

    On 27 September 2023, Thomas sent Suzie a WeChat message requesting a meeting of the board of Shield Holdings Australia. The meeting was held on 29 September 2023. This was the first such meeting of that board.

42. [164]

    Suzie has deposed that at that meeting Thomas proposed, without notice, that she be removed as Chief Executive Officer of Shield Holdings Australia and that he be appointed in her place.

43. [165]

    Thomas gave this account of that meeting:

44. [166]

    Suzie evidently saw this as a departure from what she had understood Thomas to mean when he had said “things would continue on in the same way, whatever was on paper”. [43]

45. [167]

    Thus, she sent this email to Thomas and Robin:

46. [168]

    Later that day, Robin sent an email stating his agreement with the five propositions set out in Suzie’s email.

47. [169]

    There is no evidence that any step was taken in response to Suzie’s and Robin’s “request” that the “restructure of Shield Business” be stopped “immediately” or that the “Trust Deed of Shield Holdings Australia Unit Trust” be “terminated immediately”.

48. [170]

    What appears to have happened is that Suzie, with Robin’s support, has sought unilaterally to put to an end the arrangements agreed in July 2023.

49. [171]

    I have received no submissions as to what, if any, legal effect those actions had.

50. [172]

    Those actions appear to have been born of the events in September 2023, to which I have referred, [44] rather than because of any “coercion” leading to the execution by Suzie and Robin of the 12 July 2023 documents.

51. [173]

    Thus, on Suzie’s and Robin’s account of it, Thomas invited Suzie, and later Robin, to participate in a business that he founded. Each of Suzie and Robin made a substantial contribution to the business, both in its day to day activities but also in advancing funds to the business and working without salary. Thomas told them that, in due course, the three of them would sit down, discuss and endeavour to agree on a fair redistribution of shareholding in the Shield Group. They did this in about July 2023. Suzie and Robin proposed a 50:30:20 split. Thomas insisted on a 64:20:16 split: an outcome that involved some movement by Thomas but not as much as Suzie and Robin wanted. The result has not been shown to be so commercially unfair to amount to oppression. Ultimately, as relations continued to deteriorate between the parties, it was Suzie who sought to “stop the restructure”.

52. [174]

    I see no basis on which to describe Thomas’s conduct as being oppressive.

53. [175]

    In any event, s 232 of the Act is only engaged if it is shown that, relevantly, the conduct of the affairs of the company in question is oppressive to a member of the company.

54. [176]

    Thus it has been said that “the statutory remedy relates to acts done in the conduct of the affairs of the company or to acts or omissions of the company”. [45]

55. [177]

    The dispute here relates to the conduct of the shareholders inter se. The conduct does not concern the business or affairs of the companies in the Shield Group. The Plaintiffs do not allege that any of the companies in the Shield Group was a party to any agreement or representation or to the negotiations in July 2023 of which Suzie and Robin complain.

56. [178]

    Even if what I have described could somehow be seen as the conduct of the affairs of any one of the companies in the Shield Group, its remoteness from the companies’ separate existences to those of Suzie, Robin and Thomas, would cause me not to exercise the discretion under s 233 to, relevantly, make an order for the purchase by one member of the shares of another.

The acquisition of the Chinchilla Property

1. [179]

   As I have said, the Chinchilla Property is in Queensland and is the site from which Shield Hardwood conducts a hardwood export business.

2. [180]

   Since December 2018, Thomas Gem Stone has been the registered proprietor of the Chinchilla Property. As I have said, [46] the Plaintiffs seek an order that Thomas Gem Stone transfer the Chinchilla Property to a nominee of Shield Resources.

3. [181]

   To understand the context in which that claim is made, it is necessary to examine the events leading to Thomas Gem Stone’s acquisition of the property.

4. [182]

   Suzie said that on 27 August 2018 she had a conversation with Thomas in which Thomas told her that:

5. [183]

   Thomas denied any such conversation. He said:

6. [184]

   To a large extent, the Plaintiffs’ case concerning the Chinchilla Property depends on this alleged conversation.

7. [185]

   Suzie made no note of it.

8. [186]

   In this context it has been held that:

9. [187]

   Faced with this conflict in the evidence, it is necessary to look at such objectively established matters as might cast light on the probability of what was said in the August 2018 conversation.

10. [188]

    It is also necessary to bear in mind the observations of McLelland CJ in Eq in Watson v Foxman: [48]

11. [189]

    On 14 September 2018, Thomas Gem Stone entered into a contract with Danma Property Pty Ltd to purchase the Chinchilla Property for $418,000.

12. [190]

    On 17 September 2018, Shield Resources transferred $19,000 to the account of Thomas Gem Stone to pay for the deposit.

13. [191]

    On 27 November 2018, Shield Resources transferred a further $416,584.48 to Thomas Gem Stone to pay the balance of the purchase price and related expenses such as stamp duty and solicitors fees.

14. [192]

    The transaction is recorded in:

15. [193]

    During the hearing, much attention was focused on the descriptor “loan” appearing in Thomas Gem Stone’s bank statement.

16. [194]

    Argument before me proceeded on the basis that this reflected instructions given by Thomas to the relevant bank at the time.

17. [195]

    Suzie’s evidence about this was:

18. [196]

    Mr Elliott and Mr Goodyear submitted:

19. [197]

    Later in their submissions, Mr Elliott and Mr Goodyear put the matter more moderately:

20. [198]

    In oral closing submissions, Mr Elliott submitted that Thomas had used the word loan “secretly” and that “he wants to call it a loan”.

21. [199]

    But what else could the transfers referred to at [192] above be? No-one suggests the transfers constituted gifts. On Suzie’s account of her 27 August 2018 conversation with Thomas, he told her that “the Chinchilla Property was going to be paid for using Shield Resources’ funds”. [49] Thus, on her own evidence, she and Thomas did “talk about there being a ‘loan’ for the benefit of Thomas Gem Stone”. Small wonder that Thomas caused his bank to describe the larger transfer as a “loan”.

22. [200]

    The funds used by Shield Resources to make these advances to Thomas Gem Stone were sourced from the loan made to Shield Resources by Mr Zhong, to whom I have already referred, of $1,151,645.06 pursuant to a loan agreement made on 18 September 2018. That amount was transferred to Shield Resources by Mr Zhong on 21 September 2018. It was Mr Zhong who obtained the judgment on 18 December 2023, to which I have already referred. [50]

23. [201]

    On 12 December 2018, Thomas Gem Stone became the registered proprietor of the Chinchilla Property.

24. [202]

    On 8 August 2019, Thomas Gem Stone transferred $470,000 to Shield Resources. The credit entry in Shield Resources’ account reads “Feng Ye Loan Ye Ft”. The source of these funds was Thomas’s family trust, of which Thomas Gem Stone was then trustee.

25. [203]

    It is common ground that there was a running account in place between Thomas Gem Stone and Shield Resources. The payment by Thomas Gem Stone of $470,000 appears to represent the repayment by Thomas Gem Stone of the amounts advanced to it by Shield Resources on 17 September 2018 and 27 November 2018: $19,000 and $416,584.48 respectively, a total of $435,584.48. The difference of $34,415.52 may constitute a payment on account interest.

26. [204]

    That the payment on 8 August 2019 was intended by Thomas to be a repayment of the loan is confirmed by Thomas’s use of the descriptor “loan” in relation to the deposit to the Shield Resources account.

27. [205]

    The relationship between Suzie and Thomas was, at this time, harmonious. Therefore, there was no reason for Thomas to seek to disguise the true nature of the August 2019 payment.

28. [206]

    Mr Elliott put to Thomas in cross-examination that the purpose of the 8 August 2019 transfer of funds to Shield Resources was to fund a payment of $500,100 made from the Shield Resources account a few days later. That may be so, and it may explain why Thomas chose to cause the payment to be made when he did. But as Mr Kelly and Mr Maroya submitted, it is irrelevant. The payment must be seen as being credited to the running account between the two companies. How Shield Resources chose to apply the funds has no bearing on the state of that account. Mr Elliott did not otherwise challenge Thomas about this payment.

29. [207]

    I find that the 8 August 2019 payment represented repayment by Thomas Gem Stone of the advances made to it by Shield Resources.

30. [208]

    Therefore, by 8 August 2019, Thomas Gem Stone had itself funded the purchase of the Chinchilla Property.

31. [209]

    Thereafter the Chinchilla Property was redeveloped to make it a suitable site for the operation by Shield Hardwood of its timber export business.

32. [210]

    Those improvements included construction of permanent buildings and facilities, including a weighbridge, office building, shed, and various associated works. The funds to make those improvements were provided by Shield Resources for a little less than $400,000 and by Shield Hardwood for some $238,000.

33. [211]

    My attention has not been directed to evidence showing how, if at all, this expenditure by Shield Resources and Shield Hardwood has been reflected in the financial records of those companies and of Thomas Gem Stone.

34. [212]

    This expenditure has increased the value of the Chinchilla Property but, taking into account the depreciated replacement value of the improvements, by only some $313,800. [51]

35. [213]

    But Shield Hardwood has had the use of these facilities, and of the Chinchilla Property itself since its acquisition by Thomas Gem Stone, evidently without charge or any formal arrangements.

36. [214]

    As Mr Kelly and Mr Maroya submitted, the expenditure on these improvements related to the use of the Chinchilla Property for the purpose of carrying on a timber business, and it was Shield Hardwood, not Thomas Gem Stone, that carried on the business, and “in that way, all of the payments in question were for the benefit of [Shield] Hardwood, not Thomas Gem Stone”.

37. [215]

    The Chinchilla Property has been used as security for borrowings by other members of the Shield Group.

38. [216]

    Most recently, on 28 August 2023, the Chinchilla Property was offered to Judo Bank as security for a $4.8 million facility it made available to Shield Formply to refinance the obligations undertaken by that company in relation to the purchase of the Nangwarry Property.

39. [217]

    The Chinchilla Property was valued at $1,270,000 as at 30 October 2023. The Nangwarry Property was valued at $3,100,000 as at 20 September 2023. Whether in these circumstances there is any equity remaining in the Chinchilla Property is a matter which remains to be seen; but seems unlikely.

40. [218]

    During the course of the 2023 restructure negotiations, a proposal was made in relation to the Chinchilla Property.

41. [219]

    As I have set out above, [52] Shield Holdings Australia was incorporated on 9 May 2023 with, at that point, a shareholding in the proportions of 50:30:20 for Thomas, Suzie and Robin, reflecting the restructure position as then proposed by Suzie and Robin.

42. [220]

    On 11 May 2023, Shield Investments QLD Pty Ltd (“Shield Investments QLD”) was incorporated as a wholly owned subsidiary of Shield Holdings Australia.

43. [221]

    On or about 12 July 2023, Thomas, Suzie and Robin executed the documents to which I have referred, [53] having the effect that Thomas, Suzie and Robin hold shares in Shield Holdings Australia, and units in the Shield Holdings Australia Trust in the proportions 64:30:16 respectively.

44. [222]

    On 19 July 2023, a further company, Shield Assets QLD Pty Ltd (“Shield Assets QLD”), was incorporated as a wholly owned subsidiary of Shield Investments QLD.

45. [223]

    Those arrangements are reflected in the chart which I have attached to these reasons. [54]

46. [224]

    At one stage, prior to execution of these documents, the solicitor engaged by Thomas in relation to the restructure, Mr Smith from Goodwin & Co Lawyers, prepared a Subscription Agreement in relation to a further trust into which it was evidently then hoped an external investor, perhaps Vcoco, would subscribe for units with a total value of $5.5 million.

47. [225]

    The draft Subscription Agreement stated in Sch 2, as amongst the Conditions Precedent to the prospective investor subscribing for units:

48. [226]

    There is no evidence to the provenance of this document save that it was prepared by Mr Smith. There is thus no evidence as to who it was that suggested that the Chinchilla Property might be transferred to “Shield QLD Investment Pty Ltd”. But it must have been one or more of Thomas, Suzie and Robin. Thus, each must have been alive to the possibility of the Chinchilla Property being transferred from Thomas Gem Stone to a Shield Group entity as a part of the restructure discussions.

49. [227]

    There is also no evidence that this document was ever executed. That is perhaps because no investor was located that was prepared to subscribe for the contemplated $5.5 million units.

50. [228]

    Mr Elliott and Mr Goodyear placed emphasis on this evidence Thomas gave concerning that document:

51. [229]

    The passage I have emphasised shows that Thomas was agreeable, at least in principle, to the Chinchilla Property being transferred to Shield Assets QLD, and thus into the Shield Group. It also shows that the possible fate of the Chinchilla Property was a matter very much on the table during the restructure discussions.

52. [230]

    In about May 2023 Robin circulated a proposed “Structure Diagram”, as attached. Annexure 3 - Proposed Structure Diagram May 2023

53. [231]

    That document referred to, amongst other companies, “Shield QLD Assets Pty Ltd ATF Shield Assets Unit Trust”. It was described as a “Property Holding QLD” company.

54. [232]

    In September 2023, after Thomas, Robin and Suzie had executed the Trust Deed and Security Holders Deed on 12 July 2023, Robin circulated a further structure diagram, attached. Annexure 4 - Proposed Structure Diagram September 2023

55. [233]

    This document referred to, amongst other companies, “Shield Assets QLD Pty Ltd ATF Shield Assets QLD Trust” and described it as “Holding Property: 195 Auburn Road Chinchilla QLD 4413”.

56. [234]

    By then, Shield Assets QLD had been incorporated as a wholly owned subsidiary of Shield Investments QLD. This occurred on 19 July 2023.

57. [235]

    Thomas referred to these documents in his affidavit and commented:

58. [236]

    It is not clear to me how Thomas could have seen the September diagram as having this effect because, by September 2023, he, Suzie and Robin had executed the 12 July 2023 documents giving Thomas a majority interest in Shield Holdings Australia and thus of all the other companies in the diagram.

59. [237]

    Thomas did not say in his affidavit that he saw any difficulty with the Chinchilla Property ultimately being transferred to Shield Assets QLD.

60. [238]

    Thomas gave this evidence concerning those diagrams:

61. [239]

    The passages I have emphasised suggest that Thomas did have a discussion with Suzie and Robin in September 2023 about the subject of the Chinchilla Property being transferred to Shield Assets QLD.

62. [240]

    The fact that Robin circulated the two diagrams, the first referring to “Shield QLD Assets Pty Limited” with the descriptor “Property Holding QLD”, obviously a reference to the Chinchilla Property, and the second making specific reference to the Chinchilla Property, and correctly naming the by then incorporated Shield Assets QLD as “holding” that property, shows the possible fate of the Chinchilla Property was front of mind to both Robin and Suzie during the restructure discussions.

63. [241]

    In their Amended Summons the Plaintiffs seek:

64. [242]

    In their Amended Commercial List Statement, the Plaintiffs allege:

65. [243]

    And:

66. [244]

    It is then said to follow that:

    1. (1)

       Thomas Gem Stone holds the Chinchilla Property on an express, resulting, constructive or Quistclose trust [55] for Shield Resources;

    2. (2)

       alternatively, that Thomas and Thomas Gem Stone are obliged to give effect to the “Chinchilla Property Agreement”;

    3. (3)

       alternatively, that Thomas and Thomas Gem Stone represented that they would purchase and hold the Chinchilla Property on the basis earlier pleaded, and it would be unconscionable for Thomas and Thomas Gem Stone to depart from the representation.

67. [245]

    As developed in closing submissions, the Plaintiffs assert:

68. [246]

    Arising from these matters, Suzie and Robin seek an order that Thomas and Thomas Gem Stone sign all documents and take all actions necessary to register NewCo and transfer the title of the Chinchilla Property to NewCo.

69. [247]

    Notwithstanding the prayer in the Amended Summons, the contentions in the Amended Commercial List Statement make clear that the Plaintiffs do not allege that Thomas Gem Stone was to hold the Chinchilla Property on trust for Shield Resources “absolutely”.

70. [248]

    Rather, the allegation is that the agreement was that Thomas Gem Stone was to hold the Chinchilla Property on trust for NewCo, with NewCo to have the same shareholding as Shield Resources “to hold the Chinchilla Property as part of a proposed restructuring”.

71. [249]

    The shareholding posited in the Amended Summons for NewCo is 69.5% to Thomas Gem Stone, 30% to Mana Assets and 0.5% to Awake. This has been the shareholding of Shield Resources since Suzie’s shareholding, through Mana Assets, was increased from 6% to 30% in 2022. [56]

72. [250]

    But this is not what Suzie says was agreed in the August 2018 conversation, which was that “the shareholdings of NewCo would be in the same proportions as agreed in due course for the whole Shield Group”; not as they were agreed in 2022 to be for Shield Resources itself.

73. [251]

    In their written submissions, Mr Elliott and Mr Goodyear expressed the matter using the same language as Suzie had stated.

74. [252]

    But in closing oral submissions, Mr Elliott put the matter as it is stated in the Amended Commercial List Statement. Thus, Mr Elliott submitted:

75. [253]

    A short answer to this case is that Suzie’s evidence does not prove it.

76. [254]

    Her evidence was that Thomas said the shareholding in NewCo was to be “in the same proportion as agreed in due course for the whole Shield Group”, not the same shareholdings as Shield Resources “as part of a proposed restructuring of the Shield Group”. [57]

77. [255]

    The restructuring agreed in 2023 for the “whole Shield Group” was that agreed for Shield Holdings Australia: 64% for Thomas through Thomas Gem Stone, 20% for Suzie through Mana Assets, and 16% for Robin through XCQ Holdings: not 69.5% for Thomas Gem Stone, 30% for Mana Assets and 0.5% for Awake, as is claimed in the Amended Summons.

78. [256]

    Assuming it was permissible for Suzie and Robin to depart from their pleaded case, and that urged by their counsel in final submissions, there is a wider problem.

79. [257]

    Suzie said that it was agreed as part of the 27 August 2018 conversation that, once NewCo was established, the Chinchilla Property would then be transferred to it. This is reflected in the allegation in the Amended Commercial List Statement set out above that NewCo would have the same shareholding as Shield Resources “as part of the proposed restructuring”, and that the Chinchilla Property would then be transferred to NewCo: that is, also “as a part of the proposed restructuring”.

80. [258]

    But during the 2023 restructuring negotiations, Suzie did not act as if she understood this was the agreement. There was a proposal, evidently made in the context of a hoped for $5.5 million investment by a third party, that the Chinchilla Property be transferred to Shield Assets QLD. For some reason, not explained in the evidence, that proposal did not proceed. There is no suggestion in the evidence that Suzie put forward any other proposal whereby the Chinchilla Property would be transferred to NewCo as part of the restructure. And Suzie and Robin eventually agreed to the restructure reflected in the 23 July 2023 documents without insisting on any arrangement relating to the Chinchilla Property.

81. [259]

    It is not to the point that Suzie and Robin contend they were “coerced” into agreeing to the 12 July 2023 arrangements. The point is that, so far as the evidence reveals, they did not insist that a transfer of the Chinchilla Property to NewCo should form any part of the arrangements, despite the fact that, as I have explained, the topic was on the table for discussion.

82. [260]

    It appears that Shield Assets QLD was incorporated for the purpose of being the transferee of the Chinchilla Property. Indeed, in the second corporate chart referred to above, which was prepared on behalf of Plaintiffs, Shield Assets QLD is described as having been “incorporated to hold and manage Chinchilla property”.

83. [261]

    But it was not to be and, as I have said, Mr Elliott eschewed in terms the proposition that Shield Assets QLD could be NewCo.

84. [262]

    If Suzie had, in August 2018, received an assurance from Thomas that the Chinchilla Property would be transferred to NewCo established for that purpose, and having a shareholding “in the same proportion as agreed in due course for the whole Shield Group”, surely the time to insist that such assurance be honoured would have been during the 2023 restructure discussions.

85. [263]

    In fact, Suzie did not make any assertion concerning the Chinchilla Property until the commencement of the Federal Court proceedings in February 2024.

86. [264]

    Mr Kelly asked Suzie about this:

87. [265]

    The answer to Suzie’s rhetorical question is that if, as she asserted, Thomas had “always said he’s going to transfer the [Chinchilla] Property to Shield Group”, the obvious time to raise the issue was during the 2023 restructure discussions at which time the “proportions … for the whole Shield Group” were agreed, to adopt the words that she contends Thomas used in August 2018.

88. [266]

    But, although the Chinchilla Property was referred to in those negotiations in the circumstances I have described, Suzie and Robin ultimately settled the restructure absent any provision for the Chinchilla Property.

89. [267]

    In those circumstances I do not have an “actual persuasion” [58] that the arrangements between Suzie and Thomas in August 2018 concerning the Chinchilla Property could have been as Suzie has deposed.

90. [268]

    The Plaintiffs’ case for an express trust, a Quistclose trust, an estoppel and the alleged Chinchilla Property Arrangement depended on my acceptance of Suzie’s evidence concerning the August 2018 conversation.

91. [269]

    As I do not accept such a conversation took place, those claims must fail.

92. [270]

    The Plaintiffs’ case for a resulting trust depended on establishing that Shield Resources paid for the Chinchilla Property.

93. [271]

    For the reasons I have set out above, this has not been established. Thomas Gem Stone borrowed the purchase price from Shield Resources in September and November 2018 and repaid that borrowing in August 2019.

94. [272]

    The Plaintiffs’ alternative case was for a constructive trust.

95. [273]

    In their written submissions, Mr Elliott and Mr Goodyear put the argument this way:

96. [274]

    It is however by no means clear to me that the acquisition of the Chinchilla Property was an opportunity that should be seen as being available for Shield Resources in the relevant sense.

97. [275]

    On Suzie’s own account of the August 2018 conversation, Suzie agreed that Thomas Gem Stone should own the property to protect it from “operational risks”. And Thomas Gem Stone’s acquisition of the Chinchilla Property allowed Shield Hardwood to use it for its own purposes and without charge.

98. [276]

    In any event, the only other shareholder in Shield Resources, Mana Assets, and its only other director, Suzie, agreed that Thomas Gem Stone was to acquire the Chinchilla Property.

99. [277]

    Although I have not accepted Suzie’s account of the August 2018 conversation, there is no suggestion in the evidence that she did not know of and agree to Thomas Gem Stone acquiring the property and using the resources of Shield Resources to do so; nor that she did not understand to what use Thomas Gem Stone would put the property.

100. [278]

     Apart from the above matters, the only allegation of oppression made by Suzie and Robin concerning the Chinchilla Property is Thomas’s alleged use of the funds of Shield Resources and Shield Hardwood to fund the improvements to the Chinchilla Property.

101. [279]

     As I have said, my attention has not been directed to any evidence showing if or how those companies have accounted for the funds used to effect those improvements.

102. [280]

     Suzie was, at the time, a director of and, through Mana Assets and Phoenix Group Australia, a shareholder in each of Shield Resources and Shield Hardwood. She knew that Thomas was causing the funds of those two companies to be used to fund the improvements to the Chinchilla Property.

103. [281]

     Her evidence was that:

104. [282]

     As I have not accepted Suzie’s account of the 27 August 2018 conversation, I do not accept that the understanding to which she deposed was based on any such conversation.

105. [283]

     The fact is that she knew of and agreed to the use of Shield Resources’ and Shield Hardwood’s funds to improve the Chinchilla Property. The result has not been shown to be so commercially unfair to amount to oppression.

106. [284]

     Even if I were persuaded that, despite these matters, the circumstances constituted oppressive conduct by Thomas in relation to either Shield Resources or Shield Hardwood, I cannot see how that could compel a conclusion that Thomas Gem Stone transfer the Chinchilla Property to Shield Resources.

107. [285]

     As Mr Kelly and Mr Maroya submitted, at the most what might be called for is an account by Thomas Gem Stone to Shield Resources and Shield Hardwood for such benefit as Thomas Gem Stone may have gained by reason of this expenditure. Any such account would have to take into account the benefit that Shield Hardwood has had from its use of those facilities and of the property generally.

108. [286]

     In any event, this is not the relief sought.

109. [287]

     For completeness, I will deal with the submission made by Mr Kelly and Mr Maroya that the Plaintiffs had no standing to bring the claim concerning the Chinchilla Property because the claims were for the benefit of Shield Resources and NewCo, and that the Plaintiffs have not sought or obtained leave under s 237 of the Act to bring a derivative claim.

110. [288]

     In response, Mr Elliott and Mr Goodyear pointed to authorities to the effect that the court’s powers under s 233 of the Act are wide enough to vindicate a company’s punitive claim.

111. [289]

     Thus in Lukaszewicz v Polish Club Ltd, [59] Black J said: [60]

112. [290]

     In view of the conclusions to which I have come, this point does not arise.

113. [291]

     The Plaintiffs’ claims in relation to the Chinchilla Property fail.

Alleged oppression – alleged serious mismanagement of the sawmill construction

1. [292]

   The Plaintiffs make the following allegations on this subject in their Amended Commercial List Statement:

2. [293]

   Thomas said that the purpose of setting up Shield Holdings South Australia was to set up a timber milling and manufacturing facility in South Australia similar to the one that he had set up in China. He said that he designed and ordered the plant and equipment and supervised the installation and testing of the production line, and that by early October 2023, the production line was mostly assembled and had been successfully tested.

3. [294]

   Thomas said that, on 5 October 2023, he met with Suzie and Robin. He said the meeting was tense and that Suzie said words to the effect, “Have you changed your mind? Can we go ahead with the restructure?” Thomas said that he replied, “No, I do not want to go ahead. I started these companies and I am not going to be pushed out of management.”

4. [295]

   Thomas said that he and Suzie have not had a polite conversation with each other about any of the affairs of the Shield Group companies since that occasion.

5. [296]

   What Thomas apparently did not know was that between 28 September 2023 and 3 October 2023, Kevin, ostensibly in his capacity as “WHS Officer” of Shield Holdings South Australia, had conducted an “inspection” of the site at the Nangwarry Property.

6. [297]

   Kevin produced a “Nangwarry WHS Initial Report” on 4 October 2023. That document contained, under the heading “Executive Summary”:

7. [298]

   In his report, Kevin identified:

8. [299]

   That report provoked the following fiery email exchange.

9. [300]

   First, Kevin circulated his 4 October 2023 “Report” and stated:

10. [301]

    Thomas replied in two separate emails which, together, said:

11. [302]

    Kevin responded:

12. [303]

    Kevin later emailed:

13. [304]

    Thomas replied:

14. [305]

    A short time later, on 6 October 2023, the Building Surveyor from the Wattle Range Council wrote to Suzie:

15. [306]

    On 19 October 2023, Wattle Range Council sent Shield Holdings South Australia an “Enforcement Notice” requiring it to cease any further development work at the Nangwarry Property.

16. [307]

    This evidently prompted the following email from Kevin to Thomas:

17. [308]

    On 10 November 2023, Suzie conducted a “site visit” of the Nangwarry Property. She concluded that Thomas had not taken steps to remedy the concerns identified in Kevin’s 4 October 2023 report.

18. [309]

    On 13 November 2023, Suzie closed the Nangwarry Property to Thomas and his workers and called in the local police to remove those workers and to shut them out of the site.

19. [310]

    Suzie sent an email to staff that she allowed to remain onsite at the Nangwarry Property, and to staff at the Bordertown and Chinchilla facilities, stating “Thomas Ye or his associates are not allowed to enter any company facilities”.

20. [311]

    Thomas remains locked out of the Nangwarry Property and has, in effect, been excluded from the management of the Shield Group.

21. [312]

    As of today, Suzie continues to run Shield Hardwood’s hardwood log export business and Shield Resources’ softwood export business.

22. [313]

    On 11 January 2024 Kevin, writing as Chief Operating Officer and WHS Officer of Shield Holdings South Australia, wrote to SafeWork SA lodging a “complaint” against Thomas.

23. [314]

    Under the heading “Summary”, Kevin concluded:

24. [315]

    Thus, in the context of what Kevin stated were soon to be commenced proceedings in the Federal Court, he asserted that the “shareholders”, obviously Suzie and Robin, “need[ed] to have [Thomas] prosecuted”.

25. [316]

    Kevin gave this evidence about that matter:

26. [317]

    Thus, by the time Kevin wrote this letter urging SafeWork Australia to prosecute Thomas, Thomas was no longer in a position to rectify any shortcomings that may have existed on the Nangwarry Property, nor to engage in any further acts or omissions that might have warranted regulatory intervention.

27. [318]

    On 15 January 2024, Suzie, Kevin, Robin and their associated companies commenced proceedings in the Federal Court of Australia against Thomas, Thomas Gem Stone, and various Shield Group companies, making allegations to similar effect to those made in these proceedings.

28. [319]

    Although Suzie in those proceedings swore a 32 page affidavit with 177 paragraphs, and containing numerous criticisms of Thomas, all that she said about the above matters was to refer to the 19 October 2023 Council “Enforcement Notice” and to say that Shield Holdings South Australia was “not fined by the Wattle Range Council”, and:

29. [320]

    Three days later, on 18 January 2024, an inspector pursuant to the Work Health and Safety Act 2012 (SA) issued a “Prohibition Notice” to Shield Holdings South Australia requiring that certain of the activities at the Nangwarry Property, including the operation of a “green sawing line machine”, cease. This notice was issued based on an inspection of the site on 18 January 2024, more than two months after Thomas had been excluded from the site.

30. [321]

    Sometime later, and in circumstances unexplained in the evidence, Suzie, Kevin and Robin discontinued the Federal Court proceedings.

31. [322]

    The proceedings in this Court were commenced on 4 April 2024.

32. [323]

    Mr Kelly and Mr Maroya accepted that:

33. [324]

    I think Mr Kelly and Mr Maroya understated matters somewhat when they submitted:

34. [325]

    But the tone adopted by Kevin in his 4 October 2023 report, and in his subsequent acrimonious email exchange with Thomas, suggests that he was highly motivated to paint Thomas’s activities in relation to the Nangwarry Property in the worst possible light.

35. [326]

    I think it unlikely to be a coincidence that Kevin’s initial inspection of the site took place between 28 September 2023 and 3 October 2023, at precisely the same time as the ultimate disintegration of the relations between his wife Suzie, and Thomas.

36. [327]

    As Mr Kelly and Mr Maroya pointed out, Suzie did not feel the need to cause the site conditions at the Nangwarry Property to be investigated prior to the end of September 2023, by which time her relationship with Thomas had broken down.

37. [328]

    Suzie’s evidence was that she first became concerned about the Nangwarry site conditions at the Nangwarry Property when she heard of complaints that workers from China were living on the site. Suzie assisted the workers in question in coming to Australia by facilitating their visa applications. Suzie was familiar with the site and responsible for obtaining the necessary approvals. She was also one of the two directors of Shield Holdings South Australia and, as Mr Kelly and Mr Maroya have submitted, was no less responsible for managerial oversight of the business and affairs of Shield Holdings South Australia than was Thomas.

38. [329]

    Poor management in and of itself is not a ground for the statutory oppression remedy. [63]

39. [330]

    Mr Elliott and Mr Goodyear submitted that mismanagement “may form part of a broader case, as it does here,” because:

40. [331]

    I do not accept that submission. Thomas may well have been guilty of poor management oversight at the Nangwarry Property, but I cannot see how this could constitute conduct of the affairs of the relevant company, Shield Holdings South Australia.

41. [332]

    In any event, Thomas’s conduct in relation to the management of the Nangwarry Property needs to be seen in the context of Suzie’s decision to lock him out of the site on 15 November 2023 and thereafter exclude him from all management roles in the Shield Group.

42. [333]

    It is common ground that wrongful exclusion from management may be a form of oppression. [64]

43. [334]

    As I have said above, [65] on 13 November 2023 Suzie wrote to the staff at the Nangwarry, Chinchilla and Bordertown facilities. Suzie wrote:

44. [335]

    Thereafter, Suzie and Robin have been conducting the business and affairs of Shield Holdings South Australia, and indeed all the other companies in the Shield Group.

45. [336]

    There is no controversy about this. Thus, in their opening written submissions Mr Elliott and Mr Goodyear said:

46. [337]

    Since Thomas was locked out of the Nangwarry Property, there has not been any meeting of directors of any other company in the Shield Group.

47. [338]

    In those circumstances, I see substance in the submissions by Mr Kelly and Mr Maroya:

Alleged oppression – attempts to remove or diminish Suzie

1. [339]

   Suzie and Robin contend that Thomas has sought to diminish their roles in the Shield Group by:

2. [340]

   As I have said, there was no dispute before me that exclusion of a member from management might constitute commercially unfair conduct amounting to oppression.

3. [341]

   I have set out the circumstances of the 12 September 2023 meeting above.

4. [342]

   Suzie’s evidence concerning this meeting was:

5. [343]

   The meeting minutes to which Suzie referred were in the following terms and suggest that, at the time, the debate was as to whether the proposed additional directors had “proven timber industry experience and skills”:

6. [344]

   The complaint is put more widely in the Plaintiffs’ Amended Commercial List Statement as follows:

7. [345]

   In relation to the question of the qualifications of the new directors, Mr Kelly and Mr Maroya submitted:

8. [346]

   However that may be, it does seem obvious that Thomas’s intention was to cause family members to be appointed to the board of Shield Holdings Australia so that, with Thomas, they could out-vote Suzie and Robin.

9. [347]

   That was conduct which is capable of being oppressive to Suzie and Robin.

10. [348]

    The Plaintiffs seek an order rescinding the 12 September 2023 resolution. There is no dispute that the Court has the power to do this. [66]

11. [349]

    Were the events of 12 September 2023 to be viewed in isolation, a basis may be seen to exist to make such an order.

12. [350]

    But the relevant context here is that the relationship between the parties was unravelling, as events I have outlined make clear, and whether an order should be made to rescind this particular resolution must be seen in that wider context.

13. [351]

    Further, there is no evidence that the board of Shield Holdings Australia, as constituted by members of Thomas’s family, ever passed a resolution.

14. [352]

    I have set out the circumstances of this meeting above.

15. [353]

    No resolution was passed, and the Plaintiffs seek no relief in relation to this meeting.

16. [354]

    By the time Thomas gave the notices to convene the shareholders meetings of Shield Holdings South Australia on 13 November 2023, 15 December 2023 and 21 March 2024, the relationship between the parties had come to an end.

17. [355]

    Thomas explained his position as follows:

18. [356]

    Further, as Mr Kelly and Mr Maroya submitted, the position had deteriorated by 21 March 2024:

19. [357]

    None of the meetings that Thomas sought to convene came to pass. Thomas’s attempts to convene the meetings came at a time when the relationship between the parties had unravelled. I do not see them as adding anything to the Plaintiffs’ case.

Alleged oppression – “misappropriation” of funds

1. [358]

   In their closing written submissions, Mr Elliott and Mr Goodyear used the heading “misappropriation of funds” in relation to this alleged species of oppression and submitted:

2. [359]

   However, in closing oral submissions, Mr Elliott said:

3. [360]

   The Plaintiffs point to withdrawals from the bank accounts of a number of the Shield Group companies and, in their Amended Commercial List Statement assert, without particularisation, that all of these funds were withdrawn by Thomas from those accounts “for his benefit”.

4. [361]

   The basis upon which these allegations were made appears to be no more than that Suzie did not authorise the payments.

5. [362]

   In relation to Shield Resources, the Plaintiffs allege that Thomas advanced identified sums to Shield Resources and made identified withdrawals, all said to be “for his benefit”, the Plaintiffs seek an order that Thomas “repay” the difference.

6. [363]

   The cross-examination of Thomas focused on the largest of withdrawals, namely an amount of $370,030 made from the Shield Resources account on 22 March 2018.

7. [364]

   Mr Elliott’s cross-examination of Thomas about this was as follows:

8. [365]

   Mr Elliott and Mr Goodyear describe this explanation as “unsatisfactory”. It is true that Thomas was not able to give a detailed account of this withdrawal. However, I am not prepared to draw the inference that the funds were misapplied as was implicitly suggested in Mr Elliott’s and Mr Goodyear’s submissions.

9. [366]

   Further, as Mr Kelly and Mr Maroya pointed out, the figures in the tables in the Plaintiffs’ Amended Commercial List Statement setting out the relevant deposits and withdrawals from the Shield Resources account are inconsistent with a document that Robin prepared on 25 September 2023 called “Thomas Loan Summary”. In that document, different figures are shown as having been advanced and withdrawn by Thomas and a “debit balance” of $120,819.31 is shown; compared to the “debit balance” of $440,596 alleged in the Amended Commercial List Statement. It is not possible to reconcile the two because Robin’s document does not contain dates and details of individual entries.

10. [367]

    I find this a further reason to not accept the burden of the Plaintiffs’ case, namely that Thomas has converted company funds for his own use by conducting the “running account”.

11. [368]

    In their closing written submissions, Mr Elliott and Mr Goodyear submitted that Suzie had identified a number of transactions from various Shield Group accounts that occurred in October and November 2023, being “the period during which the relationship with Thomas imploded”, which Suzie did not authorise.

12. [369]

    In his affidavit, Thomas admitted the withdrawals but said that “each of the said payments was for business purposes and within my authority, as Managing Director, to make”.

13. [370]

    Mr Elliott and Mr Goodyear submitted:

14. [371]

    Mr Elliott and Mr Goodyear continued:

15. [372]

    Mr Elliott and Mr Goodyear were referring to this passage in Thomas’s Commercial List Response:

16. [373]

    I have not been invited to make any finding about the effect of this purported ratification.

17. [374]

    The point for present purposes is that what I have set out above comprises the totality of the submissions made on behalf of the Plaintiffs in relation to what was initially described as Thomas’s “misappropriation” of funds.

18. [375]

    I am not prepared to make any such finding based on those submissions. In particular, the mere fact that the withdrawals were made in October and November 2023 is not a sufficient basis for me to make such a finding.

19. [376]

    I turn to the particular withdrawals complained of.

20. [377]

    The Plaintiffs allege two unauthorised withdrawals from the Shield Resources account.

21. [378]

    The first is the withdrawal of $132,000 made on 2 October 2023. The transaction description on the relevant bank account is “Shield Formply Australia ply”.

22. [379]

    Mr Elliott put to Thomas in cross-examination that the purpose of this transfer was to allow Shield Formply to make monthly payments to Judo Bank. Judo Bank had advanced funds in relation to the Nangwarry Property.

23. [380]

    The cross-examination was:

24. [381]

    As Mr Kelly and Mr Maroya submitted:

25. [382]

    I accept that submission.

26. [383]

    The second allegedly unauthorised withdrawal was one made on 28 November 2023 for $10,000 with the transaction description on the relevant bank account “Shield Timber SA Pty Ltd”.

27. [384]

    Thomas was not cross-examined about this transaction. Self-evidently, the payment was for the benefit of Shield Timber SA.

28. [385]

    The plaintiffs allege two unauthorised withdrawals by Thomas from the Shield Equipment Qld account.

29. [386]

    They are withdrawals on 13 and 18 November 2023 for $1,200 and $750. Both withdrawals have the transaction description on the relevant bank account “Shield Tim[b]er SA”.

30. [387]

    These entries appear to record a transfer of funds from the account of Shield Equipment Qld to the account of Shield Timber SA.

31. [388]

    No doubt Shield Equipment Qld is entitled to a credit for the sum, $1,950, on its intercompany account with Shield Timber SA.

32. [389]

    However, I see no basis to conclude that Thomas has misappropriated these funds.

33. [390]

    The Plaintiffs allege two unauthorised withdrawals from this account.

34. [391]

    The first is a withdrawal on 20 November 2023 for $1,300 with the transaction description on the relevant bank account as “Pymt Shield For”. This is evidently an intercompany loan by Shield Timber SA to Shield Formply.

35. [392]

    The second withdrawal is on 28 November 2023 for $10,000 with the description in the relevant bank account “Feng Ye Ye claim nangwarry Ye claim nangwarry”. Shield Timber SA is the manager of the sawmill business at the Nangwarry Property. This withdrawal was made after Thomas had been locked out of the Nangwarry Property but appears to be a notation of payment of a claim for expenses related to the Nangwarry Property.

36. [393]

    Thomas was not asked any questions about this in cross-examination. In those circumstances, I cannot see how I can conclude that this is an inappropriate diversion of Shield Timber SA’s funds.

37. [394]

    The balance of the Plaintiffs’ claims in relation to Shield Timber SA relate to debit card transactions totalling $1,536 that Suzie has listed in a paragraph in her affidavit. Mr Elliott and Mr Goodyear directed no submissions to these amounts and I do not propose to make any findings about them.

38. [395]

    The cheque in question here was for the princely sum of $100 and drawn on 20 November 2023 with the transaction description in the relevant bank account “Shield Formply Australia Pty Ltd 18 Nov 2023”.

39. [396]

    The entry appears to comprise a payment from Shield Holdings South Australia to Shield Formply; that is, in effect, an intercompany loan.

40. [397]

    Mr Elliott and Mr Goodyear did not suggest otherwise in their written submissions.

41. [398]

    The fact that the Plaintiffs sought recovery from Thomas of $100 in the context of litigation of this magnitude suggests that there has been a loss of perspective on Suzie’s and Robin’s part.

42. [399]

    Suzie deposed that:

43. [400]

    Suzie said that Robin said the result was that “there was not much left to cover ongoing mortgage payments to Judo Bank”. I return to Judo Bank below. [71]

44. [401]

    Four particular cheques are identified as being unauthorised withdrawals made by Thomas from Shield Formply for his own benefit.

45. [402]

    The first cheque was drawn on 18 November 2023 for $200,000 with the description “Return loan”.

46. [403]

    There are three credit entries in the same bank statement for $25,000, $75,000 and $100,000, recording that a total of $200,000 was advanced to Shield Formply by a company called Dora Investments Pty Ltd between 11 November 2023 and 17 November 2023.

47. [404]

    Thomas gave this evidence about that matter:

48. [405]

    This evidence shows that Dora Investments made a short term loan to Shield Formply that Thomas caused to be repaid by the cheque in question.

49. [406]

    The second cheque was drawn on 25 November 2023 for $10,000 with the description in the bank statement “Transfer To Feng Ye Ye Claiming”.

50. [407]

    Mr Kelly and Mr Maroya submitted that the entry in the bank statement showed that this was a claim by Thomas for refund of expenses incurred by him on behalf of the company.

51. [408]

    There is no direct evidence to support that submission. However, the bank entry shows that Thomas made no attempt to disguise the nature of the payment. Further, there is a similar entry for $37,989.57 in the same bank account for 13 December 2023 using the words “Transfer To Feng Ye ye claim nangwarry” about which no complaint is made.

52. [409]

    I accept Mr Kelly’s and Mr Maroya’s submission that the two entries “are consistent with the existence of a practice in which claims for expenses were noted when transfers took place”.

53. [410]

    In these circumstances, I see no basis to find that the transfer was made for Thomas’s benefit.

54. [411]

    The third cheque was drawn on 12 December 2023 in the sum of $239,852.54 with the description in the bank statement “WDL Branch St Ives”. The only submission that Mr Elliott and Mr Goodyear made about this was to note that “St Ives is the suburb where Thomas lives”.

55. [412]

    That submission does not take account of this evidence that Mr Elliott elicited from Thomas in cross-examination:

56. [413]

    That evidence shows that Australian Wood Wholesalers, evidently a customer of Shield Formply, paid $340,000 as payment for product and that a payment was then made by Shield Formply in the amount of $239,852.54 for the product.

57. [414]

    The final withdrawal was made on 19 December 2023 for $100,000 with the description “Refund loan”.

58. [415]

    Mr Elliott cross-examined Thomas about this in this passage of evidence:

59. [416]

    In this wide ranging cross-examination, Mr Elliott did not put to Thomas that the $100,000 was not used to repay a loan, as the entry in the bank statement suggests. As Mr Kelly and Mr Maroya submitted, what the cross-examination did confirm was that the relationship of trust and confidence between the parties had broken down, but without establishing any basis to impugn the integrity of the $100,000 withdrawal.

60. [417]

    The Plaintiffs have failed to establish that any of these payments was improperly applied by Thomas for his own benefit.

Alleged oppression – refusing to pay Judo Bank loan

1. [418]

   As I have set out above, Shield Formply borrowed $4.8 million from Judo Bank to finance the South Australian softwood timber export business being conducted by Shield Timber SA on the Nangwarry Property, which is owned by Shield Holdings South Australia.

2. [419]

   In their closing submissions, Mr Elliott and Mr Goodyear said:

3. [420]

   As I have said, Suzie has given personal guarantees and a mortgage over her properties to secure the Judo Bank loan.

4. [421]

   Mr Elliott and Mr Goodyear continued:

5. [422]

   The difficulty I see with this submission is that my attention has not been directed to any evidence to show that Thomas has “refused” to cause Shield Formply to make the relevant monthly payments.

6. [423]

   Indeed, my attention was not drawn to any evidence showing in what circumstances Shield Formply has failed to make payments to Judo Bank.

7. [424]

   If Suzie, as guarantor, has discharged Shield Formply’s guarantee then she is no doubt entitled to claim indemnity from Shield Formply and contribution from her co-sureties.

8. [425]

   Whether Suzie’s company, Mana Assets, would have the same entitlements was a matter not explored at the hearing.

Alleged oppression – refusing to repay borrowings and salaries

1. [426]

   Finally, Mr Elliott and Mr Goodyear submitted:

2. [427]

   These submissions were not developed further.

Conclusion on oppression

1. [428]

   I have found that, for the most part, Suzie’s and Robin’s claims that they had been oppressed by Thomas have not been made out.

2. [429]

   I have found that the passage of the 12 September 2023 resolution appointing Thomas’s family members to the board of Shield Holdings Australia was oppressive, albeit without any practical consequences, since no resolution was passed by that board.

3. [430]

   On the other hand, it is obvious that Suzie’s and Robin’s conduct in excluding Thomas from all involvement in the companies of which he is the majority shareholder and in their assumption of the sole control of the Shield Group since November 2023 was oppressive of Thomas.

Whether the companies in the Shield Group should be wound up in any event

1. [431]

   But, as I have said, [72] the wider background is that:

2. [432]

   In these circumstances, there can be no point in these companies continuing to trade. For them to continue to trade would carry the risk, if not the certainty, of one or more of them incurring liabilities while unable to meet them.

3. [433]

   I repeat this passage from Mr Elliott’s and Mr Goodyear’s final submissions:

4. [434]

   Later, Mr Elliott and Mr Goodyear submitted:

5. [435]

   In closing oral submissions, Mr Kelly submitted that all companies in the Shield Group should be wound up, apart from Shield Holdings South Australia, which he said “might be one exception” to the winding up of all companies in the Shield Group.

6. [436]

   In that regard, Mr Kelly submitted:

7. [437]

   I do not accept that submission.

8. [438]

   The appropriate course is for orders to be made for all companies in the Shield Group to be wound up.

9. [439]

   I shall however defer making those orders to give the parties an opportunity to consider whether some alternative arrangement can be arrived at.

The loan claims

1. [440]

   In view of that conclusion, it will likely be for the liquidator of the companies in the Shield Group to adjudicate on the remaining issues.

2. [441]

   However, I will deal with them briefly.

3. [442]

   Each of Suzie, Mana Assets, and Robin allege that they have advanced funds to various of the Shield Group companies.

4. [443]

   Thomas did not dispute the fact that loans had been made.

5. [444]

   However, Mr Kelly and Mr Maroya submitted:

6. [445]

   Suzie claims that she is owed:

7. [446]

   The evidence on which Suzie relies comprises schedules set out in one of her affidavits of the advances allegedly made to each of these companies, together with “repayments” to Suzie from Shield Resources. The schedules have been annotated to cross-reference the relevant bank statements.

8. [447]

   Many, but not all, of those entries in the bank statements refer to a “shareholder loan”.

9. [448]

   On 25 September 2023, Robin sent Suzie and Thomas documents called “loan transaction summary” in relation to each of them. I have referred to the “Thomas loan summary” above. [73]

10. [449]

    The “loan transaction summary” concerning Suzie was entitled “Suzie Loan Transaction” and recorded, under the heading “Deposit to SR” a total amount of $1,955,940.27 and, under the heading “loan payback from SR” a total of $1,209,834.23 leaving a “remaining balance” of $746,106.04.

11. [450]

    Although both these columns refer to “SR”, [74] the loans in relation to the deposits include “cash deposit”, “cash deposit to Suzie” and “cash deposit to Suzie (from Vcoco)”.

12. [451]

    Other notes make reference to “SH”, which Robin confirmed was a reference to Shield Hardwood. Those notes include “Suzie directly deposit to SH account” and “Michael Ma Shasong Sun deposit to SH”.

13. [452]

    Still other notes make reference to “Holdings account”, which I infer to be a reference to Shield Holdings South Australia. Those notes include “Deposit to Holdings account” and “to holdings account”.

14. [453]

    Robin’s covering email said:

15. [454]

    Those “individual records”, whatever they may be, are not before me.

16. [455]

    Suzie replied to Robin on 29 September 2023:

17. [456]

    The figure in Suzie’s email is the “remaining balance” figure in Robin’s “loan transaction summary”.

18. [457]

    It is true that this figure is close to the figure that Suzie claims is now due to her from Shield Resources: $752,589.97.

19. [458]

    But that does not take into account the further sums that Suzie contends are due to her from the other Shield Group companies to which I have referred.

20. [459]

    The total of these amounts is $1,170,089.97.

21. [460]

    On 6 October 2023, Robin sent Suzie and Thomas the document to which I have referred above. [75] That document recorded, under the heading “Shield Debt Amounts as of 6 October 2023”, that the amount of “Suzie’s Loan” was $746,106.04.

22. [461]

    In this uncertain state of affairs, I am not prepared myself to conduct an analysis of the bank statements to which Suzie has referred in her evidence.

23. [462]

    I am satisfied that Suzie is owed a considerable sum by one or more members of the Shield Group but am not able to determine that figure.

24. [463]

    In view of my overall conclusion as to the appropriate manner in which these proceedings should be disposed of, I do not propose to consider the matter further.

25. [464]

    Robin claims to be owed the following amounts:

26. [465]

    These amounts total $3,367,394.16 and US$2,992,826.14.

27. [466]

    In Robin’s 25 September 2023 “loan transaction summary”, in respect of his own position, he said that the “remaining balance” due to him was $1,347,184.62.

28. [467]

    Robin repeated that figure as being the amount due to him in his 6 October 2023 document.

29. [468]

    It appears that a reason the amount that Robin now claims is a much greater figure is his contention that, arising from Suzie’s 29 September 2023 instruction that he assume personal responsibility for funds “sourced by” him, he has, in the circumstances I have discussed above, [76] assumed responsibility for the “$8 or $9 million” that his “friends” had advanced for the purposes of the Shield Group.

30. [469]

    As I have said, in support of this contention, Robin produced a series of letters, all dated 2 May 2024, by a number of persons with Chinese names which purport to be an assignment of those persons’ entitlements against various Shield Group companies to Robin. None of those persons was called.

31. [470]

    In that uncertain state of affairs, although I am satisfied that one or more of the Shield Group companies is indebted to Robin, I cannot form any view about what the level of that debt might be.

32. [471]

    Mana Assets contends that it is owed the following amounts:

33. [472]

    The total amount sought by Mana Assets is thus $1,403,256.

34. [473]

    Suzie’s evidence in relation to these loans is a total set out by reference to pages in the relevant bank statements with the dates and amounts of the payment. Each of those payments are simply described as “transfer”.

35. [474]

    In his 6 October 2023 document titled “Shield Debt Amounts as of 6 October 2023”, Robin did not include any amount as being owing to Mana Assets.

36. [475]

    Nonetheless, it does appear from the entries in the bank statements that monies were advanced by Mana Assets as Suzie contends.

37. [476]

    Mana Assets also seeks to recover from Shield Equipment a debt that it contends was assigned to it by Tongling Ruihong International Trading Co Ltd, a company associated with Robin’s nephew.

38. [477]

    Mr Kelly and Mr Maroya accepted that the evidence appeared to show that Mana Assets was entitled to recover this sum but submitted that Shield Equipment is in no position to pay the amount in question. The amount was US$908,396.17, which converts to $1,392,835.

The salary claims

1. [478]

   There is now no dispute about Suzie’s, Robin’s and Kevin’s entitlement to the salary and superannuation entitlements for which they contend.

2. [479]

   Thus Mr Kelly and Mr Maroya accepted that “the Court may well find that the above entitlements” [77] are payable, but Mr Kelly and Mr Maroya did not suggest there was any other dispute than the quantum of the amounts claimed.

3. [480]

   Shield Resources was the relevant employer until 23 April 2023 after which the employment contracts were novated to Shield Intermodal.

4. [481]

   Mr Kelly and Mr Maroya added that neither Shield Resources nor Shield Intermodal had the financial capacity to pay these amounts.

Conclusion

1. [482]

   I will give the parties time to consider these reasons before considering further what orders should now be made.