Bon McArthur Transport Pty Ltd (in liq) (recs & mgrs apptd) v Lange

Judgment 1By Amended Originating Process filed on 5 August 2013, the Plaintiff, Ms Janine Gooley (to whom I refer, without disrespect, as "Janine") seeks, inter alia, a declaration that she is and remains a director of the First Defendant, Motasea Pty Ltd ("Company"). She also seeks a declaration that she is the holder of one fully paid share in the Company and, in the alternative, an order that the Second Defendant, Mr Melville Gooley (to whom I will refer, without disrespect, as "Bill" as he is usually known) and the Company are estopped from asserting the contrary and other relief which I will address below. The Company has not taken an active role in the proceedings. The proceedings were defended by Bill, who is Janine's father and a shareholder in and director of the Company. Bill also has three other children, Brett, Linda and Aleta. 2The primary issues in dispute in the proceedings are whether Janine is a shareholder in the Company and whether she was removed as a director of the Company by resolution purportedly passed on 25 January 2013 by Bill, purportedly acting as sole shareholder of the Company. An anterior question arises as to whether Janine had been validly appointed as a director of the Company since, if she was not validly appointed as a director, then the question of the validity of her removal from that position is of little practical significance. The determination of these issues depend on a series of corporate events, substantially all of which took place in, at best, an informal manner. It will be convenient to address the issues and the evidence by reference to Janine's pleaded case. Bill, by his Counsel Mr Goodman, made clear in opening that he was approaching the case on the basis of that pleaded case. 3Both Bill and Janine led affidavit evidence in their respective cases, including relying on their own affidavits. Bill also relied on an affidavit of the Company's accountant, Mr Colley, who took over the Company's accounting affairs in about 2000. Janine did not press an application to cross-examine Bill, given his age and health, on the basis that Mr Colley was made available for cross-examination and that no adverse inference would be drawn from the fact that matters were not put to Bill in cross-examination. Whether Janine is a shareholder in the Company 4As I noted above, Janine seeks a declaration that she holds one fully paid share in the Company. Her Amended Statement of Claim pleads and particularises certain facts that appear to be material to this claim, although the facts pleaded are generally not linked to the particular claims. 5It is necessary to refer to the earlier history of the Company before turning to the events on which Janine relies in respect of this claim. The Company was incorporated in December 1988. Bill and his late wife, Mrs Joyce Gooley (to whom I will refer, without disrespect, as "Joyce"), then each held one share as recorded in the Company's 1996 annual return. Bill was appointed as a director of the Company on 19 December 1988 and is the secretary of the Company. Joyce suffered a stroke in April 1991 and was thereafter in hospital, rehabilitation facilities and a nursing home until her death in February 2000. Dr Brett Gooley, who is Bill's son and Janine's brother, was appointed a director of the Company on 12 June 1992. 6A transfer of Joyce's one ordinary share in the Company to Bill, a minute of meeting in respect of that transfer and a share certificate recording that Bill held two ordinary shares in the Company, were prepared in late 1997, several years after Janine's stroke but prior to her death (Bill's affidavit, 6.12.2013 [10]; Ex D2 pp 41-43). Bill's evidence is that he is not aware of the location of "any such" signed transfer, minutes or share certificate. The evidence did not address whether Joyce executed the relevant transfer. Bill also does not give evidence of any recollection that he signed any such transfer, minute or share certificate. 7The 1999 annual return for the Company, signed by Bill on 17 March 2000, recorded Bill as holding two shares in the Company (Bill's affidavit, 6.12.2013 [15]; Ex D2 pp 51-53). Joyce died in February 2000 and probate of her estate was not applied for (Bill's affidavit, 6.5.2013 [12]). Bill's evidence is that, if Joyce had owned shares in the Company at the time of her death in 2000, they would have been bequeathed to Goold Enterprises Pty Ltd, as trustee of the Gooley Family Trust, under cl 3 of her will. Dr Brett Gooley ceased to be a director of the Company on 2 February 2000. 8The first matter pleaded by Janine supporting her claim to be a shareholder in the Company seems to be an allegation that, on 1 May 2000, she became a member of the Company. That allegation is not particularised by reference to a corporate event that had that result - for example, a share transfer - but by reference to an annual return of the Company dated 21 November 2001 signed by Bill and lodged with the Australian Securities & Investments Commission ("ASIC") which records him and Janine as each holding a single share in the Company (Statement of Claim [3]). The 2001 and 2002 annual returns of the Company dated 21 November 2001 and 14 January 2003 signed by Bill also recorded Bill and Janine as each holding one share in the Company. Subsequent annual returns prepared by Mr Colley also recorded Janine as holding one share in the Company but there is no evidence they were either signed by Bill or lodged with ASIC. Mr Colley accepted in cross-examination that he prepared those documents on Bill's instructions. I understand that acceptance to be no more than an acknowledgement that he was preparing those documents in the course of his retainer for Bill or the Company and consistently with that retainer. It was not put to him, and I do not understand him to have accepted, that Bill on any particular occasion informed him in respect of any particular return that Janine was or was not a shareholder in the Company. 9Mr Colley also produced, on subpoena, unsigned minutes of annual general meetings of the Company each dated 31 December 2002-2011 which record Bill and Janine having been present. The fact that the minutes were not signed and each of the meetings purports to occur on the same day over a nine year period supports an inference, which I draw, that no such meetings occurred. 10For a period, Janine was responsible for the management of properties held by the Company. It appears that, in February 2010, Bill took the position that Janine was not a shareholder in the Company, writing to her stating that: "Finally, you do not own [the Company]. You are only managing the Company." By a further facsimile dated 2 September 2010, Bill stated that "I don't want to take [the Company] back unless forced to"; however, that proposition seems to have been directed to the management rather than the ownership of shares in the Company. By a further facsimile dated 22 October 2010, Bill advised a local council that he had in fact resumed management of the Company from 1 October 2010. 11By a letter dated 27 June 2012, Mr Colley wrote to Bill stating that "[a]s I understand it, Janine owns shares in [the Company] and that is your wish for her?" and Mr Colley also sought confirmation from Bill whether "the present share ownership by Janine is what you desire in your succession plans". On 19 December 2012, Mr Colley again wrote to Bill concerning the shareholders in the Company and noted that: "It seems that in 1999 you were the only shareholder [in the Company]. On the 2000 Annual Return you altered it to seemingly advise ASIC of a change in shareholdings to 1 each for you and for Janine. The formal steps required to make such a change seem not to have happened. Requirements needed would have been Directors meeting, recorded by signed minutes, Share transfer form then signed and Stamp Duty paid. I see no evidence of any of this happening, so it seems that ASIC should be notified of the error and their records changed back to the correct situation of you owning both shares in [the Company]. I have not called for actual documents back before the 1999 Annual Return, so I am not able to say if Mrs Joyce Gooley ever owned shares. It seems, though, that it is not necessary for us to know at this time." It seems to me that Mr Colley was correct in recognising the requirements for a valid transfer of a share in the Company to Janine, although I consider the question of Joyce's interest in the Company has greater significance than Mr Colley then recognised, as I will note below. 12Mr Colley's evidence is that he received oral instructions from Bill to amend the asserted error in the 2000 annual return on about 15 January 2013, and he recorded those instructions in an email to Bill's solicitor of the same date which noted that: "I received verbal instructions from [Bill] today to have ASIC alter an error that was made when lodging the 2000 year Company Annual Return. It was obviously something that he was considering doing at the time, but there were no steps taken and no share transfers were ever created. My next step is to send [Bill] a fax to confirm his instructions and I will advise ASIC as he requests. This will make him the sole shareholder." 13Janine pleads that, on 10 April 2013, Bill purported to correct the 2000-2002 annual returns lodged by the Company with ASIC which stated that she held a share in the Company (Statement of Claim [10]). Requests for correction dated 25 January 2013 were lodged with ASIC on 10 April 2013 in respect of each of the 2000-2002 annual returns which stated that: "An error occurred on the year 2000 company annual return. The annual return was altered by stating that Janine Ruth Gooley was the owner of one (1) share and Mel William Gooley was the owner of one (1) share. This is incorrect. No share transfer ever occurred. Melville William Gooley was in fact, and still is, the holder of the 2 issued shares in the company. This also applies to the 2001 and 2002 and all future Annual returns for [the Company]." 14Janine pleads, in effect, that that correction is false (Statement of Claim [11]). Bill denies that allegation. Alternatively, in Statement of Claim [12], Janine pleads that: "Any assertion that there was no valid and effective transfer of shares to [Janine] in [the Company] as recorded in the Annual Return signed by [Bill] on 21 November 2001 is without foundation." Notwithstanding the form of these pleadings, the onus is on Janine to establish the existence and efficacy of any transfer of shares in the Company to her and not on the Company or Bill to establish the truth of the contrary position. Nonetheless, Bill does seek to establish the contrary, pleading that there was no valid or effective transfer of a share in the Company to Janine; the Company's 2001 annual return to ASIC did not record a valid and effective transfer of a share to her; the statement in that annual return that she was a member was in error; and the error was corrected on or about 10 April 2013 by lodgement of a request for correction with ASIC. 15In my view, the evidence does not support a finding that Janine became a shareholder in the Company in late 2000 as the annual returns purport to record. Bill submits, plainly correctly, that whether a person is a member of a company is determined under s 231 of the Corporations Act 2001 (Cth). That section provides that a person may be a member, relevantly, if they agree to become a member of the company after its registration and their name is recorded on the register of members. The Company's constitution deals with the transfer of shares as follows: "19(1) Subject to these regulations, a member may transfer all or any of his shares by instrument in writing in any usual or common form or in any other form that the directors approve. 19(2) An instrument of transfer referred to in sub-regulation (1) shall be executed by or on behalf of both transferor and the transferee. 19(3) A transferor of shares remains the holder of the shares transferred until the transfer is registered and the name of the transferee is entered in the register of members in respect of the shares." Clause 20 of the Company's constitution in turn provides for the instrument of transfer to be left for registration at the Company's registered office and cl 21 permits the directors, in their sole and unfettered discretion, to refuse to register any transfer of a share without assigning any reason or grounds for doing so. In the present case, it is not possible to determine whether Janine's name has been entered in the company's register of members, if such a register exists, because it is common ground that it has not been located. 16An initial issue arises as to whether Bill had acquired Joyce's share in the Company so as later to transfer it to Janine. That appears to be the necessary starting point for Janine's claim in this respect since the Company's records consistently record Bill as to the owner of one share in the Company and there is no suggestion that share was transferred to Janine. Mr Goodman, who appears for Bill, indicated that Bill did not put a positive submission that the transfer from Joyce to Bill was effective, where the evidence was that the transfer was unsigned although Bill's evidence is that he had acted on the basis that it had occurred (T9). Janine's submissions recognise that there is a difficulty with any suggestion that a transfer of Joyce's share to Bill took effect, where there is no members' register, no executed or stamped documents evidencing or recording such a transfer and no evidence of any minute of meeting relating to any such transfer. Mr Johnson, who appears for Janine, accepted in oral submissions that the fact that no party suggested that Joyce's share had not been transferred to Bill did not prevent the Court reaching that finding if that was what was demonstrated by the evidence (T4). Mr Johnson also submitted that the unsigned documents did not prove that Joyce's shareholding was transferred to Bill and that, if that transfer was not effective, then her shares would have passed to the Gooley Family Trust under Joyce's will (T35). 17The evidence to which I referred in paragraph 6 above does not establish that Joyce's share in the Company was transferred to Bill so as to allow him subsequently to transfer that share to Janine. There is also no evidence that stamp duty had been paid on such a transfer, and no reason to assume that the amount of stamp duty payable would not have been immaterial given the extent of land held by the Company, at least at a later date when there is evidence as to that matter. There is also no evidence that any capital gains tax payable on such a transfer was paid. 18I should add that, after the issue of any liability to stamp duty or tax in respect of any transfer of shares in the Company arose in the course of oral submissions, I granted leave to the parties to provide further written submissions as to this matter. Janine did not make any further submissions as to the matter, which was addressed by written submissions provided by Bill's Counsel, Mr Goodman. Bill pointed out that, if a transfer of Joyce's shares to Bill took place before 1 July 1998, then any liability to stamp duty would arise under the Stamp Duties Act 1920 (NSW), with the standard rate of duty being 0.6% of the greater of the consideration paid and the unencumbered value of the share. I interpolate that the value of the share would presumably reflect the level of the Company's property holdings at the relevant time. Division 30 of the Stamp Duties Act in turn dealt with the acquisition of a majority interest in a "designated landholder" and the Company would fall within that category if the unencumbered value of the land which it held was not less than 80% of the unencumbered value of its total assets and the unencumbered value of that land was not less than $1 million. If the transfer occurred on or after 1 July 1998, then stamp duty issues would be determined under the Duties Act 1997 (NSW) and stamp duty on the transfer of a share in the Company would also be payable at a rate of 0.6% of the dutiable value of the share. The Duties Act also contained provisions applicable to the acquisition of a majority interest in a "land rich private corporation" as defined. Bill also points out that a transfer of the share in the Company from Joyce to him may have given rise to capital gains tax implications, since Joyce acquired her share in the Company after 19 September 1985. Bill rightly points out that it is not possible to address the detail of any stamp duty or capital gains tax liability arising from a transfer of the share from Joyce to him, since there is no evidence as to the value of the land owned by the Company or its other assets at the relevant time although, as I have noted above, it appears that the Company held a substantial portfolio of properties at a later date. Nonetheless, it seems to me that the Court should be less ready to draw an inference that Joyce transferred her share to Bill where there is no evidence that any applicable stamp duty or capital gains tax was paid. 19It has also not been established that Janine subsequently agreed to a transfer of a share to her or to become a member of the Company. Neither Janine nor Bill gave evidence of any such transfer or agreement, so as to establish that she became a member of the Company for the purposes of s 231 of the Corporations Act. Bill's evidence is that: "To my knowledge there has never been any meeting, share transfer, allotment of shares, transmission of shares, minute or resolution evidencing any issue, allotment, transfer or transmission of any shares in [the Company] to [Janine]." (Bill's affidavit, 6.5.2013 [15]) Janine also did not give evidence of the execution of a transfer of any share in the Company to her, or of any steps taken by Bill or by her, to her knowledge, to pay stamp duty on such a transfer. Janine's affidavit dated 16 October 2013 instead relied only on documents with ASIC to evidence the transfer of the share in the Company to her, which appear to have been obtained by later company searches. 20Bill's supplementary submissions as to stamp duty and capital gains tax, to which I referred above, also noted that stamp duty in respect of a transfer of the share held by Bill to Janine would arise under the Duties Act and duty would have been payable by Janine as transferee. As I noted in paragraph 18 above, the standard rate of duty on such a transfer would have been 0.6% of the dutiable value of the share, determined as the greater of its unencumbered value and any consideration paid for it. It appears that the provisions of the Duties Act applicable to "land rich" companies would not have applied to such a transfer, because Janine would not have acquired a majority interest in the Company by reason of it. Bill also points out that such a transfer may have given rise to capital gains tax liability, since any previous acquisition of the relevant share by Bill from Joyce would have occurred after 19 September 1985. Bill again points out that it is not possible to address the detail of any stamp duty or capital gains tax liability arising from a transfer of that share, since there is no evidence as to the value of the land owned by the Company or its other assets at the relevant time although, as I have noted above, it appears that the Company did hold a substantial portfolio of properties at least at a later date. Nonetheless, it seems to me that the Court should be less ready to draw an inference that Bill transferred the share to Janine, where there is no evidence that any applicable stamp duty or capital gains tax was paid. 21Janine also relied on the subsequent annual returns signed by Bill to submit that there was a transfer of the relevant share by Bill to Janine (T36). So far as the evidence goes, only the annual returns in the period 2000-2002 were signed by Bill. Mr Johnson relied on the decision in Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 666-667 in respect of the admissibility of public documents. I accept that the annual returns in this case are admissible, and they were admitted without objection; however, the weight to be given to the matters recorded in them must be determined by reference to s 1274B(2) of the Corporations Act and the evidence as a whole. Mr Goodman in turn submitted that an entry on an annual returns submitted to ASIC cannot, of itself, make a person a member of a company. 22Section 1274B(2) of the Corporations Act provides that: "In a proceeding in a court, a writing that purports to have been prepared by ASIC is admissible as prime facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by ASIC, by using a data processor, from the national database." Bill points out that ASIC's database presently records Bill as the beneficial owner of the two ordinary shares in the Company. The prima facie position arising from that record needs to be tested, however, against the circumstances before and after the lodgment of a notice of correction by Bill which brought about the present position reflected in ASIC's records. The evidence to which I have referred above does not, in my view, displace that prima facie position. 23Mr Goodman also referred to Maddocks v DJE Constructions Pty Ltd [1982] HCA 17; (1982) 148 CLR 104 at 117 to contend that Janine was not a member of the Company because there is no evidence of entry in her name onto the register of members. In my view, that decision is distinguishable since a register was in evidence in that case, and did not record the name of the person claiming to be a shareholder, albeit that register had been created prior to the hearing in the Court of Appeal, whereas the register in this case has not been located and is not in evidence. Janine's claim in estoppel 24Alternatively, Janine contends that Bill and the Company are estopped from asserting that she is [sic] a shareholder of the Company (Statement of Claim [12]). I proceed on the basis that that paragraph is intended to contend that the estoppel is against Bill or the Company asserting that Janine is not a shareholder of the Company, and Bill's Defence proceeds on that basis by denying the allegation. The allegation is particularised as follows: "[Bill] as Director of the [Company] has executed documents including Annual Returns reflecting the fact that [Janine] was a shareholder in respect of one ordinary fully paid share beneficially owned in the capital of the [Company]. [Bill] executed documents recording the change in shareholding to reflect the shareholding in the [Company]." Bill accepts that he signed the 2000, 2001 and 2002 annual returns which recorded Janine as a shareholder in the Company, but contends that this falls short of what is required to establish an estoppel. Janine also gives evidence of various occasions on which Bill had said to her that he would give the Company to her or put the Company into her name (Janine 16.10.2013 [15], [17]) in 1999 and 2000. Such statements appear to be directed to a future position that Janine would be the sole shareholder in the Company rather than any present position that she was one of two shareholders in the Company. As I have noted above, Bill had plainly advised Janine of his position that she was not a shareholder in the Company at least by February 2010. 25This pleading is put, first, as a representational estoppel. I should briefly identify the elements of such an estoppel although the parties devoted little attention to this matter in submissions. In Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 at 444, Deane J observed that the law does not permit an unconscientious departure by one party: "from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party's detriment if the assumption be not adhered to for the purposes of the litigation." In Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2010] NSWSC 776 at [42]ff, Pembroke J identified three key elements of a representational estoppel as being that the defendant's words or conduct must be clear and unambiguous; the defendant's conduct in relying to its detriment on those words or conduct must be reasonable; and the defendant must know or intend that the plaintiff will act or abstain from acting in reliance on those words or that conduct or, in effect, have some reasonable expectation that its words or conduct will induce some detrimental reliance by the plaintiff. 26So far as Janine relies on a representational estoppel, it does not seem to me that any element of unconscionability is established so as to support a representational estoppel that would confer a right to a share on Janine that she otherwise does not have. If, as I have found, the documents lodged by Bill with ASIC were incorrect and Janine was not in fact a shareholder of the Company, then it seems to me to be consistent with conscience rather than inconsistent with it to correct the public record so that it records the true position, particularly where the true position seems to be Joyce's estate, which was not implicated in the lodgement of the incorrect information with ASIC, in fact had held the relevant share. 27Alternatively, Janine relied in submissions on a conventional estoppel. A conventional estoppel may be established where the party asserting that estoppel has adopted an assumption as to the terms of its legal relationship with the party to be estopped; that other party has adopted the same assumption; the parties have conducted their relationship on the basis of the mutual assumption; each party knew or intended the other to act on that basis; and the departure from that assumption will occasion detriment to the party asserting the estoppel: Waterman v Gerling Australia Insurance Company Pty Ltd [2005] NSWSC 1066; (2005) 65 NSWLR 300 at [83] per Brereton J. As Bill points out, a conventional estoppel involves an element of agreement, whether express or implied, or at least demonstrated acceptance of a particular state of things, and is not established by acts done by one person without the other's knowledge: Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 at 46 per McPherson J. So far as Janine relies on a conventional estoppel, it does not seem to me that Bills' unilateral act on one shareholder in lodging incorrect information with ASIC could establish a conventional estoppel by which Bill and Janine - and still less Joyce's estate - are bound. 28Janine also pleads (Statement of Claim [13]) that: "Acting in reliance upon the validity of her shareholding in [the Company] [she] accepted appointment and fulfilled her duties as a director of the [the Company]" The alleged reliance is not referrable to the relevant representations made in the annual returns lodged with ASIC and, indeed, there is no evidence that Janine had seen those annual returns. The matters pleaded by Janine do not seem to me to establish any detriment of substance. Indeed, it appears that Janine obtained significant financial benefits from her involvement with the Company over the period she was acting as a director. Bill's evidence is that, until August 2013, the net rental income received on 24 units at Auburn was paid into the Company's bank account operated by Janine and he was unable to access that account to pay expenses and outgoings payable by the Company (Bill 12.12.2013 [10]). 29Janine also contends that it is Bill's intention that she in due course have ownership of the Company, having regard to the undated and unsigned deed between Janine and Bill to which I have referred above; his evidence in his affidavit dated 6 December 2013 that, under his current will, all of the shares he owns in the Company are bequeathed to her; and a letter dated 27 June 2012 from Mr Colley seeking clarification bequeathed of Bill's intention. I do not consider that the first or third of those items have significant probative weight, where the deed is not signed and Mr Colley's letter was not answered. So far as Bill's own evidence of his intention is concerned, an intention that Janine should obtain ownership of the Company, by operation of Bill's will on his death, provides no support for a claim in estoppel that she already holds one share in the Company. 30It is also important to recognise that, even if estoppel were established, the appropriate form of relief is not necessarily to give effect to the relevant representation. In Commonwealth v Verwayen above at 413, Mason CJ observed that: "There must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption". It does not seem to me that the matters pleaded or the evidence would support the relief sought by Janine, since any detriment suffered by Janine could be remedied by relief falling well short of an order that she be registered as the holder of the relevant share. Allegation that Janine is a director of the Company 31Janine pleads certain matters relevant to her alleged appointment as a director of the Company in 2000, although they do not seem to be material to whether she is now a director of the Company since it is common ground that she was removed as a director in late 2010 or early 2011. I will nonetheless address these matters since they are addressed by the evidence. 32Janine pleads that she became a director of the Company on 1 May 2000, and this pleading is particularised by reference to a notification lodged with ASIC (Statement of Claim [4]). A notification of change of officeholders to ASIC dated 2 May 2000 bears Bill's typewritten signature recording her appointment as a director and Bill admits that Janine became a director of the Company on 1 May 2000. Both Janine's pleading and Bills' admission appear to proceed on the basis, which seems to me to be incorrect, that a notification of the appointment of a person as a director to ASIC brings about that appointment, irrespective of whether the requirements of the Company's constitution or the Corporations Act were complied with in respect of that appointment. Janine also pleads that she became a director of the Company on 16 November 2000, and this pleading is also particlarised by reference to a notification lodged with ASIC (Statement of Claim [5]). The 2000 annual return of the Company signed by Bill in November 2000 records each of Bill and Janine as directors of the Company and contains a handwritten notation adding Janine as a member of the company. A Change of Officeholders form lodged with ASIC on 8 November 2000 also records that there were two directors of the Company, Bill and Janine (Janine's affidavit, 16.10.2013, Annexure C, CB 29-30). 33It may be that Janine was appointed as a director of the Company, although in February 2000 rather than in May or November 2000. It is not necessary to reach a final view as to that matter since there is no dispute that Janine was subsequently removed as a director and whether she is now a director therefore depends on whether she was later reappointed to that position. Bill's evidence is that he initially appointed Janine as a director of the Company on 2 February 2000 and there is evidence of a meeting of directors held on 2 February 2000, signed by Bill, recording that appointment. Clause 60(1) of the Company's constitution permits the Company, at a general meeting at which a director retires, to appoint another director by resolution. It does not appear the Company took that course since there is no suggestion that a general meeting took place. 34Alternatively, cl 61(1) of the Company's constitution provides that the directors may at any time appoint any person to be a director to fill a casual vacancy or as an addition to the existing directors. Clause 73 of the Company's constitution provides that the quorum for a director's meeting is two directors; however, an amendment to the Company's constitution made in 1996 (to which I refer below) apparently removed that requirement where Bill was then the only director, after Dr Brett Gooley had ceased to be a director. Bill's appointment, in his capacity as director, of Janine as a director in February 2000 therefore appears to be valid; however, cl 61(2) of the Company's constitution has the effect that, if Janine was appointed in that manner, she only held office until the next annual general meeting unless re-elected at that next meeting. 35I should add that the 1999 annual return for the Company, signed by Bill on 17 March 2000, records Bill and Janine as its directors (Bill's affidavit, 6.12.2013 [15]; Ex D2 pp 51-53). On any view of the evidence, Janine was not a director of the Company in 1999, having apparently been appointed to that position no early than February 2000. The Company's accountant, Mr Colley, also produced, on subpoena, unsigned minutes of meetings of directors of the Company reportedly held on 14 December in each of the years 2002-2010 attended by Bill and Janine to approve the Company's accounts. These minutes were not signed and each of the meetings purports to occur at an unidentified time on the same day over an eight year period. Those matters support an inference, which I draw, that no such meetings occurred. The minutes of a meeting of the Company purportedly held on 14 December 2011 to approve the accounts are signed by Bill but the reference to Janine as a director in those minutes is deleted in hand. 36Janine pleads that a document was lodged with ASIC recording that she was removed as a director on 17 November 2011 (Statement of Claim [6]); and it was common ground between the parties that Janine was removed as a director of the Company in late 2010 or 2011; and Janine did not contest the effectiveness of that removal. Her evidence is that Bill told her that "I'm taking control of [the Company] from you" and that she did not object to him removing her as a director of the Company at that time (Janine's affidavit, 16.10.2013 [31]). There is no minute of a general meeting purporting to affect that removal but it was notified to ASIC by a Change to Company Details form dated 17 December 2011. 37Janine pleads that she was reappointed as a director of the Company on 10 October 2012 (Statement of Claim [7]). Whether she is now a director of the Company turns in part on the validity of that appointment. In his Defence, Bill accepts that Janine was appointed as a director of the Company on 9 October 2012. I do not consider that the Court is bound by the parties' agreement in that regard if it is contrary to the evidence and the requirements of the Corporations Act and the Company's constitution as to the manner in which a company director may be appointed. 38Bill's evidence is that, while in hospital following a fall in October 2012, Janine was reappointed as a director of the Company. Bill's evidence, in his affidavit dated 6 May 2013, does not suggest that a meeting in fact occurred, although he refers to signed minutes of such a meeting and to having directed his accountant to reinstate Janine as a director of the Company. Janine refers, in her evidence, to minutes of a meeting of shareholders of the Company held on 9 October 2012 at which a resolution was purportedly passed that: "It was resolved that Ms Janine GOOLEY who has consented in writing to her appointment, be, and is hereby, appointed a Director of the Company, that her duties commence forthwith and that the Secretary arrange for notice of her appointment to be advised to the Australian Securities and Investments Commission." That meeting is recorded as having taken place at a rehabilitation hospital in Kogarah and Janine's evidence is that she did not attend a meeting with her father at that hospital. Janine was not cross-examined as to that evidence, although it was not wholly consistent with the evidence of Mr Colley, in his affidavit dated 6 May 2013 of a telephone conversation, initially with Janine and then with Bill on 9 October 2012 while Janine was visiting the hospital, concerning that appointment. Janine's evidence of this matter was against interest and consistent with the absence of evidence of such a meeting given by Bill. It follows from Janine's evidence that the purported meeting to reappoint her as a director of the Company on that date did not take place. 39Even if a meeting of Janine and Bill as shareholders of the Company had occurred on 9 October 2012, it does not seem to me that it was effective to bring about Janine's appointment as a director of the Company, because, for the reasons noted above, Janine was not then a shareholder of the Company; Joyce's estate was not represented at that meeting; and the quorum requirement for such a meeting under the Company's constitution was not satisfied, because only one of the two shareholders in the Company attended the meeting. No application was brought under s 1322 of the Corporations Act in respect of the conduct of the meeting, and it seems to me unlikely that such an application could have succeeded in the absence of participation by one of the Company's two shareholders in any purported appointment of Janine as a director at this time. 40It appears that, on 25 January 2013, Mr Colley had a further conversation with Bill concerning Janine's intention to take the management of the properties owned by the Company to another real estate agency and Bill's suggestion that he may sell the Company's properties, to which Mr Colley had responded that that course would require the approval of both of the Company's directors. It appears that Bill then instructed Mr Colley to remove Janine as a director of the Company. 41Janine pleads that a document was lodged with ASIC on 20 February 2013 recording that she had ceased to be a director of the Company effective 25 January 2013 (Statement of Claim [8]) and that, on 25 January 2013, Bill signed a minute of resolution of sole member of the Company purporting to remove her as a director of the Company (Statement of Claim [9]). That resolution provided that: "It is RESOLVED that Ms Janine R Gooley be and is hereby removed as a director of [the Company]. It is noted that the Company is entitled to operate as a single Director Company. It has become a concern, due to the actions of certain persons associated with entities owned or controlled by Mr M W Gooley that legal challenges may be made to wrest control of such entities from him. Advice has been given that M W Gooley should take back complete control to eliminate complexity and any confusion and be in an unhindered position to make any necessary decisions to protect this Company, his interests and long-term succession plans." Mr Colley was cross-examined at some length as to the proposition that Bill could not have signed that minute on 25 January, notwithstanding that Janine had pleaded that the resolution had that date. It does not seem to me that anything turns on the date on which that minute was signed for present purposes. The document was subsequently re-signed on 3 May 2013, purportedly on the basis that the signed original could not then be located. 42Janine also pleads(Statement of Claim [14]-[15]) that: 14 No notice was given by or on behalf of [Bill] to [Janine] of any meeting of Directors [sic] of [the Company] said to have been held on 25 January 2013 at which: (a) [Bill] purported to act as meeting of Member of [the Company] [sic] or (b) [Janine] was removed as a Director of [the Company]. (c) for an abridgement of time for the convening of a meeting of Member of [the Company]. 15 The resolution dated 25 January 2013 referred to in the preceding paragraph is void and of no force or effect at law or in equity. 43Janine submits that the resolution purportedly passed by Bill on 25 January 2013 as the Company's sole member could be of no force or effect to remove her as a director of the Company because she was also a member of the Company. I do not accept that submission, since Janine was not a member of the Company. I do accept that there was a second shareholder in the company, namely Joyce's estate or her personal representative, and on that basis Bill was not the sole shareholder of the Company and Janine's removal as a director was not effective on that basis. However, that matter has little practical significance, in circumstances that there is no dispute that Janine had previously been removed as a director in late 2010 or early 2011 and I have held that she was not validly been reappointed as a director in October 2012. The records maintained by ASIC are consistent with that result, indicating that Janine is not presently a director of the Company, and that record is prima evidence of that position under s 1274B(2) of the Corporations Act to which I have referred above. 44Janine also pleads that the Company's constitution does not permit it to have a single director (Statement of Claim [16]). This pleading does not appear to form the basis of any relief sought in the Amended Originating Process. It is also not apparent that Janine has standing to seek such relief where she is, on my findings, neither a shareholder nor a director in the Company so as to have an interest affected by this matter. In his Defence, Bill pleads that, on 25 June 1996, the Company's constitution was altered by the insertion of an article that allowed the Company to operate with one director, by resolution passed at a general meeting of members of the Company held on or about 25 June 1996. 45In any event, Janine's claim that the Company's constitution does not permit a single director is not established by the evidence. I recognise that Dr Brett Gooley's evidence, which was not contested, was that he was appointed as a director of the Company on 12 June 1992 and ceased to be a director on 2 February 2000 (Brett Gooley affidavit, 15.5.2013 [6]). His evidence is that he has no recollection of any proposal to make a change to the Company's constitution in July 1996 and did not attend a general meeting of the Company at Cronulla approving that change to the constitution on 25 June 1996. However, there is no suggestion that he was a member of the Company and his presence at such a meeting was not required. A Form 205 dated on 25 June 1996 was lodged with ASIC in July 1996 concerning an amendment to the Company's constitution that permitted it to operate with one director. There can be no doubt as to the authenticity of that document since ASIC responded by letter dated 8 August 1996 noting that the relevant notification was not required in respect of a proprietary company. The amendment included an additional, unnumbered, provision in the constitution that: "The Company may operate with only 1 director who may also be the Company secretary." (Bill's affidavit, 12.12.2013 [21]; Ex D4 pp 51-52) Application under s 175 of the Corporations Act 46Janine seeks orders under s 175 of the Corporations Act that the register of members of the Company be rectified to carry into effect the terms of the declarations that she seeks and that the Company lodge a notice of that correction with ASIC. Janine also claims that she is entitled as against the Company to be compensated for loss or damage suffered as a consequence of actions taken in its name to remove her as a shareholder of the Company and an order that there be an inquiry as to that loss or damage. 47Section 175 of the Corporations Act provides, relevantly, that a person aggrieved may apply to the court to have a register kept by a company corrected and, if the court orders that company to correct the register, it may also order that company to compensate a party to the application for loss or damage suffered and to lodge notice of the correction with ASIC. That section replaced s 212 of the Corporations Law and it confers a continuing power to correct the register where, for example, an entry is omitted from it: Bon McArthur Transport Pty Ltd (in liq) (recs & mgrs apptd) v Lange [2007] NSWSC 1371. That section operates in parallel to, and arguably assumes the existence of, the court's equitable jurisdiction to rectify a register: Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51; Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1996) 20 ACSR 553 at 558-559. The authorities recognise that the applicant for rectification must show a personal equity that the court will protect; prima facie, such an equity is shown if a person's name is wrongly omitted from the register; however, the court has a broad discretion whether to order the correction of the register of members and may decline to order rectification if there is some reason why that should not occur: Grant above at 51. I summarised the relevant principles in Re Mogul Stud Pty Ltd [2012] NSWSC 1639 at [7] as follows: That section does not itself confer a power to create a register, but assumes that the Court already has such a power at general law: Peninsula Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1966) 20 ACSR 553; (1996) 14 ACLC 1089 at 1094. In the well known decision of Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51, Fullagar J pointed to the discretionary character of the power to order rectification of the register and to the fact that in equity warranty rectification would prima facie be established if a person's name was wrongly included or omitted from the register; the same principle is plainly applicable where, rather than the person's name being omitted, the number of shares attributed to that person is incorrectly recorded, so as to impose a disadvantage on that person or on other shareholders. The principles of rectification at general law are relevant, and those draw attention to where the position as recorded in a document reflects the common subjective intention of the parties: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 76 NSWLR 603 at [444]ff. 48Bill contends that there is no equity to support rectification of the register in this case, where no agreement for the transfer of shares to Janine and no claim in estoppel has been established. The basis for an order correcting the Company's register has not been established, where I am not satisfied that Janine is a shareholder in, or a director of, the Company for the reasons noted above. Application under s 198F of the Corporations Act 49Janine also seeks (Amended Originating Process [2]) an order under s 198F of the Corporations Act that she is: "Enti[ti]led to access to the books of the [Company] (including financial records[)] together with an accountant and a solicitor authorised by her in writing for the purpose of investigating whether and if so the basis upon which an applicant may lie against [Melville] and/or other persons involved in or associated with transactions entered into by the [Company] between 1 July 2011 and the present time and if so advised an application being made under the provisions of sections 236 and 237 of the Corporations Act 2001 against those parties." 50Section 198F of the Corporations Act provides that a director of a company may inspect the books of that company (other than its financial records) at all reasonable times for the purposes of a legal proceeding to which the person is a party; or which that person proposes in good faith to bring; or which that person has reason to believe will be brought against him or her. That section creates a statutory right of inspection, but the Court's power to order such inspection arises under s 1303 of the Corporations Act which provides that: "If a person in contravention of this Act refuses to permit inspection of any book or to supply a copy of any book, the Court may by order compel an immediate inspection of the book or order the copy to be supplied. 51It is essential to the exercise of a director's right to inspect books under these sections that the director be, actually or prospectively, a party to litigation, and the director must establish the factual background to the application by more than unsubstantiated assertions: Stewart v Normandy NFM Ltd [2000] SASC 344; (2000) 18 ACLC 814 at [10]; Boulos v Carter; Re TARBS World TV Australia Pty Ltd [2005] NSWSC 891; (2005) 220 ALR 572; (2005) 54 ACSR 827 at [28], [31]; Re Jervois Mining Ltd; Campbell v Jervois Mining Ltd [2009] FCA 316 at [48] . This section does not support a director's inspection of books of the company in his or her capacity as a shareholder, for example in order to bring oppression proceedings: Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846 at [25]; Dick v Alan Powell Holdings Pty Ltd [2009] QSC 184 at [114]-[115]. 52There are several reasons why an order under ss 198F and 1303 of the Corporations Act should not be granted. First, I have held above that Janine is not presently a director of the company, so she is not a person eligible to inspect the Company's books under s 198F of the Corporations Act. Second, as Bill points out, Janine's Statement of Claim does not plead any facts material to the claim for access to the Company's books under s 198F of the Corporations Act. There is no evidence in the present case that Janine is party to other proceedings or that she has reason to believe the proceedings will be brought against her or that she proposes in good faith to bring such proceedings. As Bill points out, the language of the order of access sought in the Amended Originating Process - and particularly the phrases "whether and if so", "may lie" and the phrase "if so advised" - are inconsistent with a present proposal of commencing such proceedings and the form of the Amended Originating Process indicates that Janine does not, in fact, presently propose to bring such proceedings, as distinct from having in mind an investigation to determine whether to do so. In submissions, Mr Johnson, who appears for Janine, referred to the fact that the Company may have sold properties within this period and those sales may have given rise to capital gains tax liabilities. He did not identify any basis to suggest that those sales were wrongful or identify any other basis on which proceedings might be brought under those sections. 53Third, in Stewart above, Burley J observed at [15]-[16] that the fact that an investigation of the company's books was sought to determine whether any wrongful acts had occurred was a matter which at which required caution in determining whether or not the plaintiff proposed in good faith to bring the relevant proceedings. In Boulos v Carter above at [28], Barrett J observed that an "essential element" of the right of inspection under s 198F is that the "claimant director be, actually or in prospect, a party to litigation". His Honour also (at [31]) followed Stewart above in observing that a director relying on s 198F must both "establish the factual background the application" and may not do so by "unsubstantiated assertions", and that the Court would not grant an order under that section unless it found "that the director in question proposes to bring the particular proceeding and that the proposal is advanced in good faith" and treated the fact that the applicant did not give evidence of any proposal to bring the proceedings or identifying the purpose of access as sufficient reason to dismiss the application. Bill submits, and I accept, that the Court would not make an order under s 198F, read together with s 1303 of the Corporations Act, where the proposed legal proceedings are not identified; the books required or their relevance to those proposed legal proceedings are also not identified; and the Court is therefore not in a position to determine whether Janine is acting in good faith in respect of the request for access. Fourth, there is no evidence of any demand by Janine for access to particular books that has been refused by Bill and therefore no contravention of the section for the purposes of s 1303 of the Corporations Act. I should add that, as Bill also points out, the Court does not have power under ss 198F or 1303 of the Corporations Act to authorise inspection of a company's books by another person on behalf of a director, and the order sought by Janine that the books be made available to an accountant and solicitor authorised by her also could not been granted for that reason: Oswal v Burrup Holdings Ltd [2011] FCA 609; (2011) 84 ACSR 65 at [24]-[25]. Orders and costs 54For these reasons, the application should be dismissed. The Plaintiff should pay the Defendants' costs of the proceedings as agreed or as assessed.