Day, in the matter of A Bliss Clinic Pty Limited v Goodwin

COLVIN J: 1 These proceedings concern the state of the ASIC register in respect of two companies: A Bliss Clinic Pty Ltd (Bliss) and Reinvent Yourself Pty Limited (Reinvent). Dr Christine Day claims that Dr Bridget Goodwin has lodged documents with ASIC altering the register in respect of the two companies when she had no authority to do so. Dr Day seeks final orders rectifying the ASIC register and injunctive relief which would have the effect of preventing Dr Goodwin from lodging any further documents in respect of the companies. 2 The Australian Securities and Investments Commission was a party to the proceedings but upon its formal indication that it would abide by any order of the Court, the proceedings against ASIC were dismissed. Bliss and Reinvent are joined as defendants, but the companies are not separately represented and have not taken any active part on the proceedings. 3 Dr Goodwin has a clinic in Sydney known as Norwest Laser Centre. 4 The affidavit evidence discloses a somewhat complex history of dealings between Dr Day (and her husband) and Dr Goodwin on the other. For present purposes it is sufficient to note that it appears that Dr Goodwin was, for a period of time, living at the home of Dr Day and her husband. Dr Goodwin claims that Dr Day was, for a time, her treating clinical psychologist. 5 It appears that Reinvent was registered in July 2019. It is the trustee of the Mermaid Holdings Trust (Trust). Dr Goodwin has deposed that at the time of incorporation she needed to put Reinvent and the Trust nominally in another name until after her divorce proceedings had concluded and that the appointment of Dr Day as a director of Reinvent and beneficiary of the Trust was a temporary arrangement and that Dr Goodwin would take over at the right time. 6 It appears that in August 2019 an opportunity was presented to Dr Goodwin to purchase the shareholding in Bliss which was a registered training organisation which taught certifications in laser, cosmetic tattoo, plasma and other skills. It is common ground that in due course arrangements were agreed for the purchase of the shareholding and Dr Day and her husband provided the $250,000 to purchase the shareholding in Bliss. Reinvent became the shareholder of Bliss. This appears to have occurred in about October 2019. 7 It also appears to be common ground that Dr Goodwin would work in the business. However, in dispute is a claim by Dr Goodwin that there was an agreed arrangement by which she would earn an interest in the business conducted by Bliss by way of 'sweat equity'. She claims that there was a nominal arrangement by which she was to be paid $150,000 per year, but on the understanding that her expansion of the business and an increase in value would be the way she would make a contribution equivalent to the $250,000 paid by Dr Day and her husband. 8 It appears also that Dr Goodwin has been conducting a website using the name Reinvent Yourself and claims that those activities are in respect of her own business activities which include the Norwest Laser Centre. 9 When the matter came on before me for case management on 19 May 2020, it was apparent that Dr Goodwin claimed that she had authority to lodge documents in relation to the ASIC register on the basis of her underlying claims as to arrangements that she had agreed with Dr Day. Dr Goodwin claimed to be entitled to relief based upon those claims and sought to advance those contentions in the proceedings. As Dr Goodwin appeared on her own behalf, it was explained that if those claims were to be made then it would be necessary for her to make her own claim and that it was possible for a cross-claim to be filed. It was further explained that if the cross-claim was not filed then the claim would proceed to hearing without any possibility of relief being granted to Dr Goodwin. 10 Both parties sought to have the matter dealt with urgently because the dispute between them concerned the ongoing operation of the business conducted by Bliss. In that context, Dr Goodwin explained that her position was that it was necessary for her to be involved in the business because she was the person with the expertise to conduct the business, particularly to maintain its status as a registered training organisation. She also maintained that, at an earlier hearing, Derrington J had explained the need to maintain the status quo. She maintained that she was the one who needed to have ongoing management of the business to maintain that status quo because of her expertise. This led to a further discussion at the case management hearing about status quo and the need for the position to be preserved until the claims could be determined by the Court. 11 Directions were made for Dr Goodwin to file and serve any related claim or any cross-claim by 5 June 2020, the application by Dr Day to be provisionally listed for hearing on 19 June 2020 and for the matter to come back for a further case management hearing on 11 June 2020. The matter was also referred for mediation which was unsuccessful. 12 On 9 June 2020, my associate received from Dr Goodwin a document described as a notice of cross-claim. Under the heading 'Relief Claimed' the document stated, relevantly for present purposes: That [Dr Goodwin] be acknowledged as the director of [Bliss]. That [Dr Day] pay damages to [Dr Goodwin] for Undue Influence, Breach of Contract, Defamation and Stealing to be decided by the Court. [T]ransfer to [Dr Goodwin of an identified mobile phone number] [R]emove [a specified website] [G]rant [Dr Goodwin] access to the Company's clinic at [an address in Southport] [M]ust refrain from making disparaging comments about [Dr Goodwin] to other persons That [Dr Day] cease and desist from any competitive activities aimed at undermining [Dr Goodwin's] management of [Bliss]. 13 Under the heading 'Pleading and Particulars' the document stated: [Dr Day] exerted Undue Influence over [Dr Goodwin] as her practising psychologist… [Dr Day] breached a contract between herself and [Dr Goodwin] acknowledging [Dr Goodwin] as the business partner, then acted to demean, defame, and harass [Dr Goodwin] for her own financial gain. [Dr Day] actively communicated information to third parties…intended to damage the professional reputation of [Dr Goodwin]. [Dr Day] stole furniture from [Dr Goodwin] despite giving undertakings to the court she would allow [Dr Goodwin] to legally collect her furniture… 14 Significantly, the document was not confined to a claim as to the basis upon which Dr Goodwin said she was entitled to an interest in or control over Bliss and Reinvent. Claims of that kind might be said to be related to the relief sought by Dr Day. Instead, the document sought to raise allegations of improper conduct by Dr Day in her practice as a psychologist, allegations of defamation and allegations concerning the stealing of furniture. I recite these allegations solely for the purpose of identifying the issues to be addressed in the management of how the claims should proceed. At this stage they are matters asserted by Dr Goodwin to which Dr Day has had no opportunity to respond. They are formulated in a manner which makes it difficult for the allegations to be addressed. In particular the precise nature of the claims made and their legal basis is not clear. I make this observation without seeking to be critical given that Dr Goodwin is acting on her own behalf. Nevertheless, the current state of the claims and their formulation is a significant matter to be considered in managing these proceedings. 15 The following day, on 10 June 2020, Dr Day brought an urgent application for interlocutory relief. In support of the application Dr Day deposed to the following matters: (1) On 10 June 2020, Dr Day's solicitor received an alert from ASIC that documents had been lodged in respect of Reinvent; (2) on inquiry there were two documents that had been lodged on 29 May 2020; (3) the first document was a change to company details said to have been lodged by Dr Day in which the registered office was said to have been changed to the address of Norwest Laser Centre, Dr Goodwin was said to have been appointed as a director of Reinvent and Dr Day was shown to have transferred the shareholding in the company to Dr Goodwin. All these events were said to have occurred on 21 February 2020; (4) the second document was a change to company details said to have been lodged by Dr Goodwin in which Dr Day was removed as a director. That was also said to have occurred on 21 February 2020; (5) Dr Day did not lodge the forms and she did not authorise Dr Goodwin to lodge the forms; and (6) at no time had Dr Day agreed to resign as a director of Reinvent or agree to transfer her shares in Reinvent. 16 The relief sought was for the two documents to be withdrawn and an injunction restraining Dr Goodwin from lodging or causing to be lodged any further documents on the ASIC register concerning Bliss or Reinvent. In the course of argument, counsel sought a further order that would correct the register on the basis that the withdrawal of the documents that had been lodged would not actually alter the ASIC register. 17 The application for injunctive relief and the issue of case management came before me on 11 June 2020. In the course of the hearing I indicated that I would grant the interlocutory relief sought and that I would make directions for the claim by Dr Day to be determined on the date that had provisionally been set aside for that purpose, namely 19 June 2020. I further indicated that I would at that time consider further directions in respect of the cross-claim that Dr Goodwin sought to advance, but that I was not persuaded that the claim by Dr Day should be deferred until the matters raised by the cross-claim were ready for hearing. I further indicated that I would provide my reasons for those decisions and make orders on the application for injunctive relief after receiving a minute of orders from the plaintiff. These are my reasons.

Application for injunctive relief 18 Dr Goodwin accepted that she had lodged the documents. She maintained that she was entitled to lodge the documents because of the arrangements that she alleged had been agreed with Dr Day and her claim that Dr Day had agreed to resign during a conversation with Dr Goodwin on 21 February 2020. She said, in effect, that it was her understanding that the requirement to maintain the status quo applied only to Bliss and not to Reinvent. She claimed that the change to the ASIC register had to be made so that she could conduct the website of Reinvent and its business. She agreed that she had been carrying on those activities before the change to the ASIC register and could not identify any reason why the ASIC register needed to be altered in order for that status quo to continue. Dr Goodwin pointed to no meeting, resolution or other formal step taken by Reinvent which might arguably have conferred authority to lodge the forms. She accepted that she had lodged the first form in the name of Dr Day and could provide no basis upon which the false statement in the form to the effect that it was lodged by Dr Day might be justified. 19 In the above circumstances, I was satisfied that there was a strong basis for a claim by Dr Day to relief in a form that would require the ASIC register for Reinvent to be rectified by requiring the two forms to be withdrawn and the changes stated in the forms not to be reflected in the register and also that it was appropriate for interlocutory injunctive orders to be made reinstating the status quo position pending the determination of Dr Day's claim to final relief. 20 The principles to be applied on an application for an interlocutory injunction were recently summarised by Jackson J in Frigger v Trenfield [2019] FCA 1746 at [6]. I gratefully adopt that summary. His Honour there dealt with the proper approach where mandatory relief is sought on an interlocutory basis emphasising that it is unusual principally because the purpose of an injunction is to preserve the status quo. Here, notwithstanding that proceedings had been on foot for many weeks and a date had been set for hearing of the issues concerning the ASIC register, Dr Goodwin took matters into her own hands by lodging a false document in a direct attempt to alter the status quo by altering the record to reflect the claims she makes. If the ASIC register was now to be left unchanged pending any hearing then the register would indicate that Dr Goodwin has authority to act on behalf of Reinvent and to receive all formal documents relating to its affairs at the Norwest Laser Centre, being the premises for a business conducted by Dr Goodwin. The risk of damage that might flow is obvious. On the other hand, Dr Goodwin has identified no hardship that would flow to her interests if the injunction was to be granted. 21 The Court has a statutory jurisdiction to grant interim injunctive relief pending the determination of an application for relief under s 1324 of the Corporations Act 2001 (Cth): s 1324(4). In exercising that power it is appropriate to apply principles generally applied by the Court in considering whether to grant injunctive relief. 22 The application brought by Dr Day seeks permanent injunctive relief in respect of future conduct by Dr Goodwin that would seek to alter the ASIC register in respect of Bliss and Reinvent. It also seeks final orders rectifying the ASIC register in the exercise of the power conferred by s 1322(4) of the Corporations Act. 23 In Re Seabay Kitchen Pty Ltd [2019] NSWSC 790, Black J found in proceedings where ASIC's register was sought to be rectified that 'the Court has power to rectify the register under s 1322(4)(b)' and that 'there is a public interest in the adoption of a proper process for changes in directors and shareholders and for notifications to ASIC of directors and shareholdings': at [13]. The power extends to require rectification where the underlying process that led to the notice in the register is invalid: Re MIG Property Services Pty Limited (No 2) [2012] VSC 606 and Re Centura Global Holdings Pty Limited [2016] NSWSC 62. 24 However, the minute provided by those acting for Dr Day proposed injunctive relief that would require the withdrawal of forms that now form part of the records of ASIC and rectification of the register by way of an interlocutory order. The order proposed would be directed to ASIC. Section 1324 allows for injunctive relief to be directed to the party engaging or proposing to engage in conduct that would contravene the Corporations Act. In the present circumstances, Dr Goodwin is that person, not ASIC. In the circumstances, the terms of the interlocutory injunctive relief should require Dr Goodwin to forthwith lodge a further change to company details form reinstating the details as existed prior to the lodgement of the two forms on 29 May 2020. I would expect that lodgement to be made by no later than the end of the next business day following service of the order.

The cross-claim by Dr Goodwin 25 Dr Goodwin's cross-claim seeks relief in respect of a number of claims. First, it asserts that there was a contract pursuant to which she became a partner in a business with Dr Day. The precise terms of the contract or the nature of the interest are not indicated (nor can those matters be discerned from affidavits that Dr Goodwin has provided to this point). Nor is the relief sought clear. It appears that damages are sought, but it is also apparent that Dr Goodwin wishes to maintain her claim to the interest in the business that she asserts. To the extent that these matters are advanced by Dr Goodwin in answer to the claim by Dr Day to orders for rectification of the ASIC register then those matters have been addressed in affidavits. However, to the extent that Dr Goodwin seeks to go further and assert a claim to the business and damages then the claim is not in a state where it could be fairly adjudicated without much greater particularity. In short, it will be some time before this aspect of the cross-claim will be ready for hearing. 26 Second, the claim makes allegations of defamation against Dr Day. Claims of that kind require a clear articulation of the statements alleged to have been defamatory and the imputations they are alleged to have conveyed. The urgency associated with the determination of the state of current control of the two companies does not require the defamation claims to be adjudicated with urgency. 27 Third, the claim alleges stealing of furniture. This is a separate claim relating to the alleged private property of Dr Goodwin. It is unrelated to the affairs of the companies. 28 Fourth, there are allegations about Dr Day's actions as a psychologist and assertions of undue influence. These claims might be related to the first claim about the contract concerning an interest in the business. However, they are expressed with such generality that it is difficult to discern their nature and extent. They are also claims that are not ready for determination at this time. 29 Dr Goodwin sought to have all her cross-claims determined and resisted any attempt to separate out aspects of the cross-claim concerning the alleged contract about the business. 30 Both parties pressed for an urgent determination of their competing claims concerning who is entitled to be on the register as the director of Bliss and Reinvent. The dispute as to the state of the ASIC register appears to be affecting the ability of the company to deal with banks and other third parties. To the extent that Dr Goodwin says that her dealings with Dr Day mean that the register should not be altered, Dr Goodwin has been provided with an opportunity to provide affidavit material concerning those claims and has done so. It is not in the interests of the parties for the dispute about the ASIC register to be deferred. It is not possible, as matters presently stand, for there to be an urgent hearing of the matters that are raised by the cross-claim. 31 In those circumstances, I determined that the claim by Dr Day should be listed for final hearing on the date provisionally set aside on 19 June 2020. I made further directions for any final affidavits and for submissions for that to occur. I adjourned the case management hearing to the same date so that consideration may be given at that time to appropriate orders in respect of the further case management of Dr Goodwin's cross-claim. I did so because it was not possible, in my assessment, for the issues that Dr Goodwin sought to raise by her cross-claim to be the subject of effective case management in a way that might allow for those issues and the issues raised by the claim of Dr Day to be all considered expeditiously. Therefore, the appropriate course, in my view, was for the urgent aspect of the dispute, namely the state of the ASIC register, particularly who was entitled to be the director of each of the two companies to be determined as soon as possible. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.