Day, in the matter of A Bliss Clinic Pty Limited v Goodwin [2020] FCA 869 | Case summary

Federal Court of Australia|2020-06-24|Before: Colvin J

The Deed of Amendment to the Deed of Trust for the Mermaid Holdings Trust purportedly made on 21 February 2020 is invalid and of no effect.

Pursuant to s 1322(4)(b) of the Corporations Act 2001 (Cth) the register kept by the Australian Securities and Investments Commission (ASIC) relating to the fourth defendant A Bliss Clinic Pty Ltd (Company) be rectified by ASIC in the following manner: (a) the Forms 484 lodged with ASIC bearing document numbers 7EAU47054, 7EAU47062, 7EAU51357, 7EAU60673, 7EAU63980 and 7EAU63961 (Documents) be withdrawn from the register and not appear on public view; (b) the plaintiff, Christine Day be recorded as the continuing sole director and secretary of the Company as if the Documents had not been lodged; (c) the registered office of the Company be recorded as being an address notified to ASIC in writing by the plaintiff or her solicitors to ASIC within 7 days of this order; (d) Reinvent Yourself Pty Ltd (ACN 634 573 256) as trustee of the Mermaid Holdings Trust be recorded as the continuing sole shareholder and ultimate holding company of the Company as if the Documents had not been lodged; (e) the current corporate key issued in respect of the Company be cancelled; and (f) a new corporate key for the Company be issued and notified to the plaintiff.

COLVIN J: 1 A dispute has arisen between Dr Christine Day and Dr Bridget Goodwin concerning the authority to manage the affairs of A Bliss Clinic Pty Ltd (Bliss) and Reinvent Yourself Pty Limited (Reinvent). Part of the dispute concerns the authority of Dr Goodwin to lodge documents with the Australian Securities and Investments Commission (ASIC) altering the ASIC register in respect of Bliss. There is also a dispute as to the validity of a deed of amendment to the deed of trust for the Mermaid Holdings Trust (Mermaid Trust) that was purportedly made on 21 February 2020. The dispute concerns whether the deed of amendment operated to alter the beneficiary of the trust from Dr Day to Dr Goodwin. 2 The disputes about management of the two companies and the validity of the deed of amendment are part of a wider dispute between Dr Goodwin on the one hand and Dr Day and her husband Mr Michael Day on the other hand. The wider dispute concerns the circumstances in which they all came to be involved in the affairs of Bliss and Reinvent and who is entitled to control the shareholding in Bliss. The wider dispute extends into complaints raised by Dr Goodwin about the conduct of Dr Day at a time when Dr Goodwin alleges she was a patient of Dr Day who is a clinical psychologist. Dr Goodwin's complaints also include allegations about stolen furniture, statements made by Dr Day which are said to have been defamatory of Dr Goodwin and claims against Dr Day for payment for alleged services provided by Dr Goodwin and a company with which she is associated. 3 However, the present proceedings brought by Dr Day have a limited focus. They challenge the validity of steps taken by Dr Goodwin in early March 2020 to lodge documents as part of the ASIC register for Bliss and to execute the deed of amendment for the Mermaid Trust. Dr Goodwin has provided, but not yet filed, a cross-claim in these proceedings in which she claims there has been undue influence, breach of contract, defamation and stealing of items of furniture by Dr Day. However, the present application by Dr Day has been listed for hearing on the basis that the claims to relief based upon those cross-claims (the basis for which is yet to be tested) should be dealt with at a later time and at this stage it is the claims made by Dr Day that should be determined as a matter of urgency: Day, in the matter of A Bliss Clinic Pty Limited v Goodwin [2020] FCA 826. 4 The urgency arises because Dr Day and her husband have provided $250,000 that has been used to acquire all of the shares in Bliss, but control of the business conducted by Bliss is in the hands of Dr Goodwin by means of the lodgement of documents with ASIC and the instrument purporting to amend the deed of trust. Dr Goodwin maintains that her actions were justified by an underlying arrangement concerning the ownership of the business conducted by Bliss and because Dr Day orally resigned as a director of Bliss and as a beneficiary of the Mermaid Trust at a meeting held on 21 February 2020. 5 Dr Day maintains that she and her husband provided the funds to purchase the shares in Bliss on the basis that Dr Goodwin would manage the business conducted by Bliss. Dr Day says that no steps were taken of the kind recorded in the documents filed as part of the ASIC register in early March 2020 and therefore the documents contain false statements. There is no dispute that the documents were filed by Dr Goodwin when matters came to a head between Dr Goodwin and Dr Day. On the evidence, by reason of the disputes as to the state of the register and the terms of the deed of amendment, it is apparent that third parties are confused as to who to deal with concerning the affairs of Bliss. In consequence, there is something of a stalemate as to who has authority to control the future direction of the business and without resolution of the present application the business cannot be conducted properly.

Nature of relief sought 6 Dr Day seeks the following relief: (1) orders for the rectification of the register kept by ASIC as to Bliss; (2) orders cancelling the corporate key for Bliss by which authority is conferred to lodge documents with ASIC and requiring a new corporate key to be issued to Dr Day; (3) injunctions restraining Dr Goodwin from lodging further notifications for Bliss with ASIC; (4) injunctions restraining Dr Goodwin from holding herself out as an officer of Bliss or dealing with anyone on the basis that she is an officer; and (5) a declaration that the amendment purportedly made to the deed of trust for the Mermaid Trust is invalid. 7 Dr Day did not press that part of the application which sought orders for rectification of the deed of trust for the Mermaid Trust. 8 To the extent that the relief is sought against ASIC it was originally 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 in the proceedings. 9 No issue was raised as to whether Dr Day has interests that would be affected by the conduct complained of that would be sufficient for Dr Day to seek the relief claimed. Dr Day claims to be a director of Bliss and to be the sole beneficiary of the Mermaid Trust of which Reinvent is the trustee. She also claims to be the sole director and shareholder of Reinvent. I am satisfied that she has a sufficient interest to seek the relief claimed.

Statutory provisions relied upon by Dr Day 10 The relief as to the ASIC register is sought pursuant to s 1322(4)(b) of the Corporations Act 2001 (Cth). It provides that the Court may on application by an interested person make an order directing the rectification of any register kept by ASIC. Relief under s 1322(4) must not be made unless the Court is satisfied that 'no substantial injustice has been or is likely to be caused to any person': s 1322(6)(c). 11 The injunctive relief is sought pursuant to s 1324 of the Corporations Act which confers statutory authority for the Court to grant an injunction restraining a person from engaging or proposing to engage in conduct that contravenes or would contravene the Act. The provision of the Act that is said by Dr Day to have been contravened by Dr Goodwin and which Dr Goodwin threatens to continue to contravene was said to be s 1308(2) which until 18 February 2020 provided: A person who, in a document … submitted to ASIC, makes or authorises the making of a statement that to the person's knowledge is false or misleading in a material particular … is guilty of an offence. 12 The relevant provision is now contained in s 1308(1) which states: False or misleading documents Fault-based offence (1) A person commits an offence if: (a) a document: (i) is required under or for the purposes of this Act; or (ii) is lodged with or submitted to ASIC; and (b) the person: (i) makes, or authorises the making of, a statement in the document; or (ii) omits, or authorises the omission of, a matter or thing from the document; and (c) the person knows that the document is materially false or misleading because of the statement or omission. 13 Therefore, the allegations upon which the application is based concern a serious matter. In consequence, although the civil standard of proof applies, the gravity of the matters alleged must be borne in mind in considering the evidence: s 140(2) of the Evidence Act 1995 (Cth). Such a requirement to take account of the seriousness of factual allegations in forming conclusions as to whether they have been established on the balance of probabilities 'should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct': Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66 at [2] (Mason CJ, Brennan, Deane and Gaudron JJ).

Summary of result 14 On the evidence, Dr Day has established that the documents lodged with ASIC that are the subject of the application do not reflect events which occurred in fact. They are false. Further, Dr Day has demonstrated that there is a real and substantial risk that, unless restrained, Dr Goodwin will seek to lodge such documents in the future and orders should be made for a new corporate key for Bliss to be issued and for injunctions to be granted to restrain any such lodgements by Dr Goodwin in the future. Therefore, the relief sought as to the ASIC register should be granted. 15 The evidence also discloses that by express reference to the ASIC register, Dr Goodwin has been holding herself out as being a director and secretary of Bliss when that is not the case. Dr Goodwin continues to maintain that she is entitled to do so. The conduct of Dr Goodwin is creating confusion for those dealing with Bliss. Therefore, the basis for injunctive relief restraining that conduct has been made out. 16 The evidence also establishes that the deed of amendment to the trust deed for the Mermaid Trust was made without the authority of the trustee, Reinvent, and therefore the deed of amendment is invalid. There should be a declaration accordingly. 17 Dr Goodwin should be ordered to pay the costs of the application to be assessed by a Registrar on a lump sum basis if not agreed. 18 Finally, there should be a further case management hearing on a date to be fixed on application by Dr Goodwin to consider the steps to be taken in relation to the cross-claim once that cross-claim has been formally filed with the Court.

Overall chronology of events 19 Save where otherwise specifically indicated, the following chronology is based upon the contemporaneous documents produced by the parties which provide a verifiable and independent record (in the sense that most documents were produced and exchanged before the dispute emerged in February 2020 or involve communications with third parties who do not have a stake in the dispute). 20 For some time, Dr Goodwin has operated a salon in Sydney known as Norwest Laser Centre (Laser Centre). The Laser Centre is located at an address in Baulkham Hills. 21 On 21 September 2018, Dr Goodwin sent an email to a solicitor in the following terms: I have nominated you to represent me in a commercial lease contract for a new business. I'm developing a new business that requires a premises and I have negotiated to take over a hair salon in Toowong. The business is www.reinventyourself.net.au and will incorporate hair, beauty, psychological counselling and other well-ness services. The shop will be used as a base. A psychologist Dr Chris Day will be onsite consulting some of the time and the other practitioners will be referred. I am using the company Mermaid Money Pty Ltd ABN 43 139 097 662 Trading as www.reinventyourself.net.au The Agent … will be in touch with you about the lease. I think it is planned to take over mid to late October. I have paid a $4333.33 One month deposit. There will be no money paid for the business per se as I have negotiated to start a new lease. 22 Toowong is in Brisbane. Dr Goodwin also arranged a logo, website and signage for the name 'Reinvent Yourself' around the same time. The records indicate that Mermaid Money Pty Ltd is a company that has been controlled at all times by Dr Goodwin. Therefore, these initial steps are consistent with Dr Goodwin establishing 'Reinvent Yourself' as a new business and an intention that Dr Day would provide psychological counselling from the same business premises. At that stage Reinvent was not involved and the business was being conducted through Mermaid Money Pty Ltd. 23 It appears that arrangements were made by Dr Goodwin to incorporate Reinvent and establish the Mermaid Trust some considerable time later in mid-2019. Invoices for arranging the incorporation (dated 1 July 2019) and the establishment of the trust (dated 2 July 2019) were sent to Dr Goodwin at that time. 24 The ASIC register for Reinvent shows that it was incorporated on 2 July 2019. At that time its registered office was the same address as that occupied by the Laser Centre in Baulkham Hills. Dr Day was the sole director and shareholder upon incorporation. 25 The documents produced by Dr Goodwin include a flyer with the logo of Reinvent Yourself that advertised a series of weekend retreats to be held in August, September and October 2019 that featured 'Highly respected Clinical Psychologist, Dr Chris Day'. They also include an email sent by Dr Day to a number of people, including Dr Goodwin, on 16 July 2019. The email says: Hello everyone, Thank you for your interest in being part of the reinvent yourself seminar weekends. The booking gateway is almost ready to go and so is the final flyer. I will send asap so you can disseminate yourself as soon as possible. [The email then set out dates for the proposed seminars in Brisbane and Sydney] 1. Please let me know if you are available for these dates. 2. We will go ahead if we can get 10 in each seminar. 3. I will cover your travel to the amount of $600 if you have to travel. 4. Everyone except Debra will only have to be there for either Saturday or Sunday. That is, only one day of work for each weekend. If you need to know which day please contact me. I have set the program based on your preferences but open to change. In the meantime, please respond about your availability. 26 There is an email response from Dr Goodwin 'All booked in for me'. There is a further email sent by Dr Goodwin to Dr Day on 10 September 2019 which says: Hi Chris, I am good for the weeeknd [sic] of 21 September if this is the date you will go ahead in Brisbane :) I am filling in some forms for ASIC and it occurs to me some may have been sent to you. Have you been sent an ASIC letter including a Corporate Key for Reinvent Yourself Pty Ltd. If so could you please scan and send me- or at lease [sic] let me know the numbers of the corporate key. If you have any other docs, eg the Mermaid Holding trust docs i would like to collect them when I am there. 27 The nature of these communications rather suggest that the Reinvent Yourself seminars, at least, were being arranged as part of the activities being undertaken by Dr Day. They also indicate that there were dealings between Dr Goodwin and Dr Day concerning Reinvent which indicate that Dr Goodwin was attending to the filing of documentation with ASIC concerning Reinvent. 28 It appears to be common ground that in the meantime, in about August 2019, the owner of the shares in Bliss, Ms Gloria Weatherley, indicated to Dr Goodwin that she was interested in selling the business conducted by Bliss. Bliss operated A Bliss Clinic at an address in Benowa, Queensland, a suburb on the Gold Coast. It was a registered training organisation (RTO) under Queensland legislation. 29 Dr Goodwin deposes to an exchange of text messages with Dr Goodwin at the end of September concerning the possible purchase of the business conducted by Bliss. She says that on 27 September 2019, Dr Day texted: This is my big risk. You change your mind and don't do the work and I am left with a business I know nothing about, have no expertise or interest. I realize that is extremely unlikely but buying this is a risk for me in this way. Is there anything we can do about that. Dr Goodwin says she responded: I won't change my mind. Then Dr Goodwin says that on 28 September 2019, Dr Day texted: Ok here is what I have got to. Mike thinks we need to do due diligence and see the place, see the deal and run it past the accountant. He is actually interested now. Passive income in retirement. I think he is thinking about how often business partners fall out. Particularly over money. In essence we would be like you and Scott [Dr Goodwin's husband] initially. I provide the money and you the sweat equity. I am not Scott and you have signed documents transferring ownership so we won't end up there. But he is thinking I will post a suite of online courses which will be our passive income and you will reimburse when you get a settlement or you work like mad and buy it off me. If you can give me your two year expansion management plan. I can get Mike on board. He really fancies living in walking distance to the beach. He can write and I will see clients, do revamp and make online courses. We will hire my revamp digital marketing company to promote all our courses. 30 Towards the end of September 2019, Dr Goodwin prepared a document entitled 'RTO Two Year Plan College of Dermal Therapies' (Two Year Plan). It contains statements to the following effect: (1) The plan relates to a business formerly known as Academy of Skin and Laser Training which has a current turnover of approximately $500,000 per annum offering three main courses and mostly using one trainer. (2) The RTO licence has been renewed for seven years. (3) New cosmetic treatment equipment is being imported by the business which is included in the sale price for the business. (4) The business has arrangements for student loans. (5) There is the potential to expand the business using the 'Sydney Salon/Campus' where there are other types of laser equipment available. (6) There was the potential to develop online courses. (7) There was a market for expanded product sales. (8) Groundwork has been done for the addition of extra courses using contracted trainers. (9) As to future turnover: Combined with the extra courses, participating campuses and the addition of more online delivery there is the potential to greatly expand the current $500k turnover, possibly by 150 per cent to $750k in 12 months and then again to possibly reach a $1million turnover within 2 years. This estimation is conservative. (10) As to further 'OH&S Expansion', the future turnover figures: This does not factor in the potential of an additional skilled owner such as a clinical psychologist with 30 years' experience exploring the potential for online delivery of Occupational Health and Safety or leadership training courses. (11) There was the possibility of using the existing RTO status to help boost OH&S packages making an expansion by 200% more than possible within 12 months. 31 The content of the Two Year Plan indicates that it was prepared to evaluate in a very general way the potential for increased turnover of the business conducted by Bliss. There is no indication in the Two Year Plan of any arrangement whereby Dr Goodwin may acquire an interest in the clinic. However, it does refer to the advantage of 'an additional skilled owner such as a clinical psychologist with 30 years' experience' thereby suggesting that the Two Year Plan was prepared at a time when it was contemplated that Dr Day might be an owner. The use of the word additional suggests that Dr Goodwin, as the author of the Two Tear Plan, contemplated at that time that there would be another owner in addition to Dr Day. 32 On the morning of 30 September 2019, Dr Goodwin sent the Two Year Plan to Dr Day describing the documents as 'Draft Notes on RTO Expansionism'. 33 A few hours later, Mr Day sent the following email to his accountant: Chris [Dr Day] and I are interested in buying a business at Southport on the Gold Coast. Could you please give us advice on what are the prudent steps to take (due diligence and so on? The idea came from a friend, Bridget Goodwin who was a wealthy property owner who is now battling in court a spouse who took her wealth. A multi-million dollar settlement looks likely in the next few months although nothing in the court system is certain or quick. Bridget has been working in the business but can't afford to buy it herself at the moment. This is the business: https://www.aasllaustralia.com.au/contact/ The owner operates as an (Registered Training Organisation) and apparently that can be transferred to Chris if she shows she is a fit and proper person which is apparently easy to do. It teaches courses in 'dermal therapy', which Bridget would manage. Chris and I would use that status to deliver online courses in psychological and communication topics for businesses. Chris is proceeding with Revamp Your Life, but due to marketing procedures, there will be a trial of one at the end of October and then start in earnest in the new year. The owner wants $100k down in October and another $100k in a few months. 34 Plainly, Mr Day was contemplating the possibility of a purchase by Dr and Mr Day of the business conducted by Bliss because Dr Goodwin could not purchase the business herself 'at the moment'. 35 The accountant responded by email saying: This is not an easy answer. I do a few registered training organisations and they are highly regulated, they are governed by so many laws and regulations around training and are very expensive to operate - compliance costs are never ending - will need a full time 'administrator' that can attend to the compliance. Over the past few years I have seen regulations around these registered training operation change so dramatically overnight without warning and a few have been put into liquidation. It is not something that I would imagine you would be willing to manage at this stage in your life. But in saying that if you want to proceed you will need to get Financial Statements and tax returns for the last three years for the business. 36 Later that same morning Dr Day forwarded both emails to Dr Goodwin saying 'This is what our accountant said'. Dr Goodwin responded within a few minutes saying: Gloria [Weatherley] pays Christie $400 per week to manage all the compliance part-time and she does a lot of this herself. Christie used to work for ASQA and is across it. This is all under control but you need to satisfy yourselves about this :) 37 Dr Day responded with the following email: Yes. That's what I said. Bottom line is that I only have 2 choices I can see. I do clinical work for the next 10 years and try to rev up revamp. Or I do this. I [say] let's give this a go because the other is always an option 38 The reference to 'revamp' appears to be a reference to 'Revamp Your Life' which was cited in the email from Mr Day to the accountant. In her affidavit evidence, Dr Goodwin said that when Dr Day tried to set up the Reinvent Yourself workshops she wanted to use her own name and changed the name of the workshops to Revamp Your Life. 39 On the evidence of Dr Goodwin, on 30 September 2019, Dr Day sent a text message to Dr Goodwin saying: We are going ahead. Please let Gloria know to go ahead … we are 100% on board. You can safely talk to Gloria and start looking for a flossie in Sydney and a house in Southport … We are excited now. The email indicates that it is Dr Day and her husband who were 'going ahead' and were '100% on board' and were now excited. 40 On 1 October 2019 an email was sent by Dr Goodwin to Dr Day referring to the trust deed for the Mermaid Trust and saying 'I have just paid the duties on this and should have the stamped document in the next few days'. The response from Dr Day was 'Brilliant. We can use it to buy the clinic! You are impressive as usual'. Plainly, in context, the reference to the clinic is a reference to the business operated by Bliss that was being offered for sale by Ms Weatherley. 41 Dr Goodwin's evidence was that a further text message was sent to her by Dr Day on 3 October 2019 which said: Got the ripped up signed documents today. Thanks. Gave them to Mike [Mr Day]. When we see you we will get an explanation about the trusts. When I signed for you I didn't look. Signed in faith in you and so never bothered to read and understand. I know that was idiotic objectively but I go on trust and instinct despite 30 years of stories like yours! 42 I observe that Dr Goodwin placed considerable reliance upon this text message as evidence that the Mermaid Trust was established for her benefit. She says that the ripping up of the signed documents was done by her as a gesture of goodwill. However, the oral evidence of Dr Goodwin as to the circumstances in which the Mermaid Trust came to be established is confused. She says at one point that Reinvent and the beneficial interest of the Mermaid Trust were put in the name of Dr Day as a temporary arrangement until after her court case with her then husband had concluded. She says at another point that at the time Reinvent and the Mermaid Trust were established the details were put in the name of Dr Day because she had been financially devastated by court proceedings and still had a debt to the bank and did not want the bank to try and grab any new business that she started. However, she also said that she and Dr Day were to all intents and purposes co-owners of the purchase of Bliss (the shares in which were purchased by Reinvent as trustee of the Mermaid Trust). Dr Goodwin also gave evidence that there was a 50/50 arrangement as part of the purchase (see below). Dr Goodwin accepted that the $250,000 for Bliss to purchase the business came from Dr Day and her husband. Dr Goodwin claimed that there was an arrangement by which she would earn her interest by 'sweat equity' and also that Dr Day and her husband did not keep their side of the bargain by contributing to the business conducted by Bliss to build up a psychology and media RTO that would eventually break away from the original business. These matters are entirely inconsistent with the Mermaid Trust being set up solely for the benefit of Dr Goodwin. There may have been an earlier point when that was contemplated, but the documentary evidence concerning the purchase of the shareholding in Bliss is entirely inconsistent with such an arrangement. 43 On 16 October 2019, Dr Day and her husband received a detailed email from their accountant headed 'Fwd: RE possible purchase of the shares [in] A Bliss Clinic Pty Ltd from Gloria Weatherley'. The email set out some analysis of the financial statements for the business that was being conducted by Bliss. Dr Day forwarded the email to Dr Goodwin with the following covering email: Hi, What do you make of this? I will have a proper read of it tomorrow and make notes for my meeting with Gloria. I think we should buy this and plan A we stay in business 50/50. Plan B we sell it to you. Plan C we lose 200k and live in rented accommodation and I do clinical work until I am 80. I will have a list of sensible questions for Gloria on Friday in any case If you know the answer to any of these please let me know and I will only ask the outstanding ones Xx. Chris 44 The next morning, Dr Goodwin sent an email to Dr Day dealing with a number of matters raised by the accountant. Then the email concluded: -further suggestions Option 1- We do the transfer and pay Gloria only 50 per cent and I make a side arrangement with her to pay my share when I get settlement funds Option 2 -We do the transfer, I make a side arrangement with her to vendor finance me until I get settlement funds hopefully within six months As soon as possible, when the coast is clear from the court case I take over both the company and the trust and continue without the need for further transfers. Option 3 we just buy it and proceed as planned. Give me a call if you like :) I'm not so busy today with clients. Bridget 45 The exchange of emails is consistent with ongoing discussion between the parties concerning some form of arrangement whereby Dr Goodwin would be able to acquire a 50% interest in Bliss if the purchase of the clinic proceeded. 46 There followed a further exchange within the next hour with the heading '$400k'. Dr Day sent an email to Dr Goodwin saying 'What I told the kids about $400k is based on 2 for the business and 2 that you said you'd give us. Please think of it like the 150k salary we are paying you to manage our clinic'. This appears to contemplate the possibility of a later injection of capital by Dr Goodwin, but that possibility and the meaning of the email is a matter that was not addressed by the parties in their evidence. The response from Dr Goodwin was: All good If you are still proceeding you need to send Gloria some positive messages as she is getting quite over it after [the accountant] yesterday. She has several Bookings for courses she is getting me to teach in immediately after 21st October that we could take the money for - about 20-30k- starting after this weekend and into November- if the transfer still happens tomorrow. If you are proceeding you need to be clear with her that you are, that you will sign and do the funds transfer tomorrow as planned earlier. I asked her about vendor financing me and she does not prefer that option. She is holding student loans for these October/November courses that she can immediately transfer to your bank account once it is opened. If you are proceeding you can take the stamped trust deed I sent yesterday and the Asic Doc for Reinvent Pty Ltd to the bank and open an account in the name [on] the contract which will be ABliss clinic. Best probably to use the contract of sale after you have signed version from [Ms Weatherley's] solicitor. The bank will want to see it. You will need to check if we continue with … ABN - I think we do because we are buying the entity. You will also need a credit card machine for the clinic and make me a read only access member of the bank account so I can check if students have paid. Give me a call if you need to. 47 Significantly, Dr Day responded just over an hour later: Hi Bridget, As you will see from the text I have reconfirmed with Gloria about Friday. I will do all the bank stuff on monday after we own the business. 48 Then, in the evening of the same day, Dr Day sent the following email to Dr Goodwin: Hi, Can you please write something undertaking to buy this company off us if we want as soon as you get your money. When you get your money you can give us 100k at least and I will give it back to him I have made it abundantly clear that as the sole breadwinner I have the casting vote. I have enough money to buy it by myself. I am really putting my foot down about this as it has a profound effect on me He will go out in an hour. We can talk then X. Chris 49 Dr Goodwin responded as follows: Hi Chris Just on a Sydney train coming home from salon. I'll be back home after 7 my time and need to get my phone on charge. Gloria has booked about 20 or 30 thousand in students for [October] and November. I will write whatever you need. 50 On 18 October 2019, a contract was entered into between Ms Weatherley and Reinvent as trustee for the Mermaid Holdings Trust. The contract was executed by Ms Weatherley, Reinvent (Dr Day signing as director) and Bliss (Ms Weatherley signing as director). 51 There is no dispute that on or about 21 October 2019, Dr Day and her husband each provided $125,000 for the purchase of all the shares in Bliss from Ms Weatherley. Dr Goodwin provided no funds for the purchase. The purchase of the shares appears to have been completed a few days later. 52 The trust deed is before the Court on the present application. The schedule to the deed states that the settlor is Dr Goodwin, the trustee is Reinvent and the beneficiaries and principal are each Dr Day. 53 The register of members for Bliss states that all of the shares in Bliss were transferred by Ms Weatherley to Reinvent on 24 October 2019. 54 Dr Goodwin has also produced a letter dated 22 October 2019 addressed 'To Whom it May Concern' that is signed by Dr Day. It is in the following terms: I wish to rent this house, for my CEO Dr Bridget a Goodwin at The College of Dermal Therapy in Southport. Dr Goodwin will be paid a base salary of$150,000 plus additional training and commission payments as she is central to the business operations and a high-level dermal therapist. I have purchased this College and I require Dr Goodwin to be in Southport as soon as possible to manage the handover and run the entire operation. Please contact me with any queries … 55 On 10 February 2020, Dr Goodwin made an email inquiry of Ms Weatherley asking for a copy of the constitution for Bliss. 56 On 18 February 2020, Dr Day sent a long email to Dr Goodwin in the following terms: I have just spent another wakeful night. This is my perspective: Mike [Mr Day] and I spent nearly half our savings on buying this business. It is 3 months and we haven't had a cent from it. I understand we are building, but I also understand that you have had what you needed out of it until now. Fair enough. I want to pay you $5K/month. It is entirely fair that you have a wage. I am not Scott. I don't begrudge you. It is right that you worked hard and could pay your bills. I need to emphasise this so you understand that this is not my issue. However, last night when I got your text about the videos you and Bianca have been making I really hit the wall with this situation. According to Xero January you sent $41,247 worth of invoices We banked $16,352 February you sent $13,928 worth of invoices So far we banked $3,300 Gloria [Weatherley] warned you that these people need to be followed up hard. Clare [the accountant] worked out that $29,500 is our break even if we both get $5K a month out of it. We need $20K just to cover our business expenses - that is, if we are both going to live on air - which is unrealistic of course. So far I have propped the business up with $8K from my savings. My savings are very hard earned and as you know, Mike doesn't have an income. This is my buffer and it is extremely distressing to see it being eaten while you are in Sydney making videos. I want to make it very clear that I understand you are working towards putting our courses online and figuring out how to market the microchanning machine. I do see that this is to our advantage going forward. However, our core business, the thing that pays the bills, is training. We also need to sell 30K worth of training every month in order to live. The other problem I have is that we can't talk about it. It makes you angry so I am not allowed to speak my distress. We really need to have a proper meeting about our expectations of each other and make a proper systematic plan going forward. It is no good you in Sydney forging ahead with projects that are so interesting to you, me here stressing about money and being furious with myself for stupidly and ignorantly putting our future and retirement on the line based on flimsy promises. I hope by laying my perspective out like this you can understand where I am coming from. I understand that we are a normal business combination: one who watches the bottom line and one who sees the future and wants to go ahead with things that look like they have potential. This is potentially the perfect combination but its success lies in mutually respecting the other's strengths and in each one of us doing what we do best. You are good at sales and expansion and I am good at order and perseverance. What we need is to value this in each other because it is balance. Plus we need to work this out because we are bound to each other in the short term. Us because the business is worth very little at the moment as the books look like we are heading for bankruptcy, and you because this is your passion and a way to secure your future regardless of the court case. I am going to talk to a doctors surgery today and will probably get 2 or 3 days/week work out of them. This will help me as I will be able to cover our rent and domestic expenses which will relieve the pressure on me somewhat and enable me to sleep at night. I will continue to do the administration - compliance, bookkeeping etc and the TAE course in the other 2 or 3 days. I need you to spend half your time on making videos and blogs etc and half your time selling training. As I said, I hope we can make a plan and come to some agreement about our expectations of each other while you are up here. I have sent this because I am tired and I need to start the conversation so we can get on the same page. Can you please think about these things and come up with your own plan. Then we can talk when you come up. Good luck with your court case, 57 Dr Goodwin responded later that day in the following terms: Sorry got this email late today. Have spoken to Clare and asked her to meet with us at 9am Friday. We should be able to work out a solution that will help you be more comfortable. Clare says we should let her know if 9am Friday is not good for you. Talk soon 58 Dr Goodwin followed up with an email: Sorry, correction already, can we make it at 10am as I have two-hour canvas training at 8am. 59 Dr Day responded: Sorry but I can't do Friday. I am going to see the eye surgeon at the hospital at 10am Dr Goodwin responded: Hi how about Thursday night [20 February] or Saturday morning [22 February]? 60 Clare then confirmed a meeting on Thursday at 5.00 pm 'in relation to setting a plan down as per my prior email'. On the evidence before me, there was then a meeting on 20 February 2020 that was attended by Dr Day, Dr Goodwin and Ms Clare Marks of Edges Me Financial and minutes were produced of that meeting by Ms Marks. 61 In the early hours of the morning on 29 February 2020, Dr Goodwin sent a long email to Dr Day threatening legal proceedings. Relevantly for present purposes it includes the following statements: Even last week you sat in a room at a meeting with Clare the accountant and agreed I need to be compensated for my 'sweat equity' and you both congratulated me on what a great job I have been doing and Clare pointed out to you very plainly that the business has grown significantly from what Gloria used to turn over. The minutes of the meeting show you agreed to all of this and the next morning you hugged me and promised me you would support my reimbursement and buyout of the business and you agreed to sign all of the documents put to you about that. However, you [sic] actions behind my back have been totally opposite to the spirit of this highly positive meeting. … The fact that I have done countless hours of work developing courses to go online already is 'sweat equity' that goes way beyond any investment you could make in the business and would cost many thousands to pay a camera crew and multi-media production company to produce. Yet you know we have spent a considerable amount of money investing in Canvas and you appear to want to flush that too. … I have your letter promising me a salary of $150,000 and as you know I have been working unpaid since September 2019. If you were to take my 'sweat equity' into account even conservatively, you owe me half of that immediately. Clare was helping me prepare this submission before you burnt that relationship so badly that she no longer wants to work with us in the business. However, the matter of defamation and damages will be considerably more costly and I am building this into my legal action. All of the people mentioned can be subpoenaed and witness statements collected, as you know I have considerable experience of this. 62 Starkly, what is not stated in the long email from Dr Goodwin is any claim that Dr Day had resigned as a director of Bliss or Reinvent or beneficiary of the Mermaid Trust. Rather what is said is that Dr Day agreed the morning after the meeting to 'support my reimbursement and buyout of the business and you agreed to sign all of the documents put to you about that' (emphasis added). But on the very different account given by Dr Goodwin to the Court on the present application there was a meeting that took place on 21 February 2020 at 8.00 am between Dr Goodwin and Dr Day where Dr Day said she would resign as a director of Bliss and as a beneficiary of the Mermaid Trust. The truth of Dr Goodwin's claims about a meeting on 21 February 2020 at which Dr Day agreed to resign must also be evaluated in the context of the matters stated in Dr Day's long email of 18 February 2020 and the convening of the meeting on 20 February 2020. These matters are addressed separately below. 63 Later on 29 February 2020, Dr Goodwin caused Bridie Films Pty Ltd (a company controlled by Dr Goodwin) to send an invoice for an amount of more than $200,000 to Dr Day for work allegedly done for Bliss. It is not clear as to the basis upon which such an invoice might have been rendered by Bridie Films and how Dr Goodwin's conduct in arranging for the invoice to be sent is alleged to sit conformably with the claims made by Dr Goodwin about the arrangement that she had with Dr Day. 64 On 1 March 2020, Dr Goodwin sent the following email to two people at Study Loans Australia Pty Ltd (with the subject heading 'Fwd: Change of Director at College of Dermal Therapies'): Please be advised that there has been a change of ownership with this RTO given the former Director Christine Day has resigned. ASQUA have been advised of the change. Please find attached the ASIC Minute notifying of a change of directors, appointing Mr Harry Anderson, as director and the appointment of a new company secretary, Dr Bridget Goodwin, the existing CEO. We require the ongoing maintenance of Study Loans to be directly with the ongoing CEO Dr Bridget Goodwin who has already been dealing with you since September 2019 using an access from her private email address bridget.goodwin@gmail.com. Due to some misinformation this access seems to have been removed last Friday. Could you please urgently reinstate it. I attach all docs you should require for this change. ASQA have been notified of the change of directors. There is no other change to the RTO ownership. Would you kindly remove any access for Chr[i]stine Day as she no longer has any authority with ABliss Clinic now that she has resigned effective 21/02/2020. Would you kindly send a password re-set to info@aaslt.edu.au so that Dr Goodwin can access the Study Loans system. The bank account will remain the same as is currently set up. Thank you kindly for your assistance. 65 The email was signed 'Dr Bridget Goodwin, CEO, College of Dermal Therapies' (being the business name then used by Bliss). Mr Anderson is Dr Goodwin's son and it appears to be common ground that he has had no involvement in the business conducted by Bliss. He was originally a party to these proceedings but the claim against him was discontinued when the Court was informed that he had resigned as a director. 66 The email prompted the national account manager of Study Loans to send an email to Dr Day which said: 'Please confirm the email as below from Bridget so we can act accordingly'. Needless to say the confirmation was not forthcoming. 67 On 5 March 2020, Dr Goodwin sent the following email to the real estate agent for the premises of the Business: The ASIC website has finally updated as discussed. I attach the details now showing office bearers for A Bliss Clinic Pty Ltd. Please note the Mermaid Holdings Trust (deed attached)owns [sic] the shares in ABliss and I am the sole beneficiary of this trust. Would you urgently proceed to change the locks as discussed and provide me with a garage fob. All banks, government departments and contractors have acknowledged this change and have supported me. Please note also, your emails will show that it is me who has been paying the rent on the clinic since October last year and sending you monthly remittances. This matter is urgent now as I have some training booked there next week that I do not wish to be interrupted by further unauthorised persons. 68 The above communications attached a document described as an ASIC minute. It purported to record the resignation of Dr Day as a director of Reinvent. Dr Goodwin sent similar communications to other people. 69 In early March 2020, Dr Goodwin caused the following documents to be lodged at ASIC concerning the details for Bliss which documents were included in the ASIC registry for Bliss: (1) A change to company details form signed by Dr Goodwin showing the appointment of hr son Mr Anderson as a director/secretary and Dr Goodwin as secretary of Bliss from 21 February 2020. (2) A change to company details form completed with a place for signature by Dr Day as director, but unsigned, showing the same changes. (3) A change to company details form completed with a place for signature by Dr Goodwin as secretary, but unsigned, showing that Dr Day ceased to be a director of the company on 21 February 2020. (4) A change to company details form completed with a place for signature by Dr Goodwin as secretary, but unsigned, showing a transfer of the shareholding in the company from Reinvent to Dr Goodwin. (5) A change to company details form with a place for signature by Dr Goodwin as secretary, but unsigned, showing that Mermaid Money Pty Ltd was the company's new ultimate holding company. (6) A change to company details form completed with a place for signature by Dr Goodwin as secretary, but unsigned, showing a change in the registered address for Bliss to the Baulkham Hills address. 70 Dr Goodwin also took steps to arrange for the preparation of a deed of amendment for the trust deed of the Mermaid Trust. It purported to record an amendment whereby Dr Day retired as a beneficiary and Dr Goodwin was appointed as a new beneficiary. A minute of trustee meeting signed by Dr Goodwin recorded that there had been a meeting of 21 February 2020 at 8.00 am attended by Dr Day and Dr Goodwin at which Dr Goodwin was appointed Chairperson and the deed of amendment was approved. The deed of amendment was purportedly executed by Reinvent with the signatures of Mr Anderson as director and Dr Goodwin as director/secretary affixed. 71 Dr Goodwin has since commenced a number of court proceedings against Dr Day. 72 In proceedings commenced against Dr Day in the District Court of New South Wales by 'Bridget Goodwin trading as Bridie Films Pty Ltd' for $223,080.00 being described as a claim for the sale of goods and services there is a statement of claim dated 3 April 2020. It says: 1. In August 2019 Christine Day encouraged me to join her in a business venture encouraging me to work as CEO of a business and also to generate video and multimedia material to populate online courses for the business which is a Registered Training Organisation. She was well aware of my extensive film-making experience and screen credits and encouraged me to proceed with this large production project. 2. Using my extensive film-making, scriptwriting and production skills I undertook this work through my company Bridie Films Pty Ltd. 3.I produced numerous online courses to be used via the RTO's website with a view to expanding the limited offerings of the RTO with Christine Day's encouragement. She led me to believe I would be well remunerated for this work, acknowledging that through these efforts I would effectively be an equity partner in the business. 4. I carried out this production work between September 2019 and February 2020 at considerable effort and personal expense both in labour and the hiring of equipment and production materials. 5. Christine Day then, without dealing directly with me began undermining my contribution and denied that she had commissioned this work. 6. There is considerable evidence of her encouraging this work to proceed and encouraging me to undertake (unpaid) specific training with an online media playtform [sic] company called Canvas with a view to implement what we had agreed upon in relation to online course delivery. 7. Without discussing this with me Christine Day cancelled her support for the project and began trying to deny that she had agreed to this work, though there is considerable evidence to the contrary and many witnesses. 8. I am seeking compensation for considerable effort and expense from her directly as she has caused me significant loss of income and damage as a result of withdrawing her support for this work. 73 The allegations in the statement of claim were verified on oath by Dr Goodwin as being true. The invoice produced to support the claim is brief and is dated 20 February 2020 (although it is said to include work up to March 2020). 74 In other proceedings in the Local Court of New South Wales at Nowra Dr Goodwin claims to be entitled to unpaid salary. Dr Goodwin has also brought a petition for the bankruptcy of Dr Day in this Court in which Dr Goodwin claims to be owed $305,580 'for Unpaid wages and agreed production work to develop multimedia modules for the College of Dermal Therapies since September 2019'. 75 On 29 May 2020, Dr Goodwin caused documents to be lodged as part of the ASIC register for Reinvent. One of the documents, purported on its face to be lodged by Dr Day, stated that Dr Goodwin had been appointed as a director of Reinvent and that that Dr Day had transferred her shareholding in the company to Dr Goodwin. Dr Goodwin did not dispute that she had caused the notification to be lodged and that it had not been prepared by Dr Day. On 11 June 2020, a mandatory interlocutory injunction was granted requiring notifications to be lodged by Dr Goodwin reversing these records and restraining the lodgement of any further notifications by Dr Goodwin in respect of Bliss or Reinvent pending the outcome of the present application.

Dr Goodwin's claims justifying the changes to the ASIC register 76 Dr Goodwin has sworn a number of affidavits in these proceedings. They are not confined to matters that are relevant on the present application. To the extent that they are irrelevant, I do not need to consider the matters raised. 77 Dr Goodwin says that when the opportunity arose to buy the Bliss business, she raised it with Dr Day on the basis that they might buy it together as a training business with Dr Goodwin building up the beauty therapy side and Dr Day building up the psychology side of the business. She says that the discussions were to the effect that there would be two parts to the business and that Dr Day and her husband could buy the company (with its RTO status) and Dr Goodwin could earn her share in the business through 'sweat equity'. Dr Goodwin deposes in terms that: On instruction and by agreement with Christine Day that we were effectively 50/50 business partners, (see emails) even though I wasn't officially a director because of my court case. I spent the next several months working unpaid, nominally on a 'salary of $150,000 a year' and also on the understanding that my expansion of the business and increase in its value would be more than equivalent to their $250,000 contribution. (emphasis added) 78 Dr Goodwin's evidence as to the arrangement concerning the ownership of the Bliss business includes the following (in her affidavits of 21 April 2020 (affidavit 1), 18 May 2020 (affidavit 2) and 15 June 2020 (affidavit 3)): (1) before the purchase of the shares in Bliss, Dr Goodwin discussed with Dr Day how Dr Goodwin could earn her share over time through sweat equity: 'effectively work unpaid but essentially buy out my share of the business while they built theirs' (emphasis added) (affidavit 1, para 6); (2) she was to all intents and purposes a co-owner (affidavit 1, para 25; affidavit 2, para 40); (3) she had a right to buy-out through 'sweat equity' (affidavit 1, paras 37-38); (4) she complained to Dr Day that they were supposed to be business partners (affidavit 1, para 43); (5) she had set up all of the company matters for Bliss with Gloria Weatherley who understood that Dr Goodwin was 'effectively the business co-owner' (affidavit 1, para 53); (6) there is considerable evidence that Dr Day acknowledged Dr Goodwin as a co-owner (affidavit 1, para 57); (7) on 20 February 2020, Dr Goodwin told Dr Day that she had effectively earned her sweat equity (affidavit 1, para 58); (8) Dr Day confirmed to Dr Goodwin on 20 February 2020 that Dr Day 'was more than on track' to achieve her sweat equity buyout (affidavit 1, para 71); (9) on 21 February 2020, Dr Day agreed that Dr Goodwin had already made her sweat equity (affidavit 1, para 74; affidavit 2, para 66); (10) Bliss and Reinvent had been set up on the basis that Dr Goodwin would come in as a director and beneficiary of the Mermaid Trust once she had earned her sweat equity (affidavit 1, para 75); (11) the spirit of the emails exchanged between Dr Goodwin and Dr Day was that Dr Day 'agreed to go 50/50 … and then allow me to buy out with my labour' (affidavit 1, para 85); (12) before the purchase of the shareholding in Bliss, Dr Goodwin suggested that they buy the business together and Dr Goodwin run the business as a silent equity partner (affidavit 2, para 24); and (13) Dr Goodwin and Dr Day 'were effectively 50/50 business partners' (affidavit 3, para 51). 79 It may be observed that the evidence lacks consistency and fails to identify how any agreement was reached and when. However, most of the descriptions of the agreement assert a 50/50 position or a relationship as business partners in which Dr Goodwin could earn her share through 'sweat equity', not that the shareholding in Bliss was purchased for Dr Goodwin. If indeed, as Dr Goodwin now asserts in these proceedings, the work that she undertook was to earn an equity position in the business being conducted by Bliss then she is not entitled to payment for that work. Yet she has pursued claims in other courts and brought a bankruptcy petition on the basis that there was an entitlement to payment for her work. Further, it is significant that in the statement of claim in the District Court Dr Goodwin does not claim that there was an agreement with Dr Day by which she might earn equity in the Business. Rather, she describes the arrangement in terms that she was led to believe that she would be well remunerated for this work, 'acknowledging that through these efforts I would effectively be an equity partner in the business' (emphasis added). 80 Further, the claims that Dr Goodwin makes about the Mermaid Trust make no sense in the context of her other evidence and the documentary evidence concerning the exchanges between Dr Day and Dr Goodwin concerning the purchase of the shares in Bliss and the development of its business. If indeed, as Dr Goodwin alleges, it was always the case that the beneficial interest in the Mermaid Trust (and control of Reinvent as trustee) was placed in the hands of Dr Day to be held for Dr Goodwin then that would mean that the whole business belonged to Dr Goodwin. Yet, Dr Day and her husband were persuaded by the Two Year Plan to pay $250,000 for the shares in Bliss on the basis of a proposal that, to put the matter in neutral terms, was to involve Dr Goodwin and Dr and Mr Day. 81 In any event, what is clear from the account given by Dr Goodwin is that she was not to be a shareholder in, or director of, Bliss from the outset and that the arrangements for the establishment of the Mermaid Trust were as recorded in the trust deed. Further, the parties meant and intended Dr Day to be the shareholder and director of Reinvent and that Reinvent would be the trustee of the Mermaid Trust. At its highest, what is alleged by Dr Goodwin is that there was some underlying oral agreement, enforceable by Dr Goodwin, by which she might at some stage secure an equal stake in the business. She justifies or explains her conduct in lodging the documents with ASIC entirely on the basis of that alleged underlying agreement and on what she alleges Dr Day said in a meeting between them held on 21 February 2020. She claims that responsibility for updating the ASIC register for Bliss was entrusted to her and she has lodged documents in the exercise of that responsibility. 82 No real issue was taken in submissions for Dr Day with the proposition that Dr Goodwin had been responsible for lodging documents with ASIC. However, assuming that was the position, the authority of Dr Goodwin did not extend beyond the performance of a secretarial function that involved lodging documents that accurately presented the factual position. It was not an authority to determine or alter matters such as the directorship, shareholding and registered office of Bliss without the required decisions being made with those with the requisite authority and proper legal steps being taken.

Three fundamental problems for Dr Goodwin 83 There are three fundamental problems with Dr Goodwin's position on the present application. 84 First, even if there was a proper evidential foundation before the Court for the existence of an agreement of the kind alleged by Dr Goodwin (a matter upon which it is not necessary to reach a conclusion), it would not be a basis upon which Dr Goodwin could unilaterally alter the shareholding, officers and registered office details for Bliss and the terms of the Mermaid Trust without compliance with the legal steps by which those changes may be effected. 85 Rather, Dr Goodwin would have to take steps to secure performance of the agreement by calling on Dr Day to convene necessary meetings of Bliss, to formally resign as a director of Bliss, to execute share transfers, to convene a meeting of Reinvent as the trustee of Mermaid Trust to resolve to exercise any power of amendment of the trust deed in accordance with the procedures set out in the deed and to formally relinquish her interest as the beneficiary and principal of the Mermaid Trust. If there was a refusal to undertake those steps then Dr Goodwin would need to bring proceedings in which she established the nature of the agreement and sought specific performance of its terms. Pending the outcome of any such proceedings, the status quo would remain in place unless Dr Goodwin could persuade a court to grant interlocutory relief based upon her claims concerning the agreement. This is the consequence of the nature of the arrangement that she accepts were properly established when Dr Day as director caused Reinvent as trustee of the Mermaid Trust to enter into the agreement to purchase the shares in Bliss. 86 Dr Goodwin also sought to justify her actions on the basis that Dr Day and her husband had not kept to the bargain she alleged had been made concerning the business of Bliss. She said that they had not taken steps to develop a new side to the business that involved building psychology and media arms to the business and, as a result, Dr Goodwin was effectively working in the business for Dr and Mr Day which had not been their agreement. If there was an agreement of that kind (about which I express no view) then an issue may arise as to whether damages could be claimed for breach of the agreement. But no right could arise for Dr Goodwin to call for a transfer of the whole of the shares of Bliss to herself and take control of the Mermaid Trust and thereby deprive Dr Day (and her husband) of any interest in the business just six months after they had paid $250,000 to buy it. 87 Second, the steps that Dr Goodwin has taken do not confer upon her a 50% interest of the kind that she describes in her affidavits as an interest that she might earn by sweat equity. The actions she has taken have resulted in 100% control of the business conducted by Bliss to be assumed by Dr Goodwin. Further, according to the records she has lodged, Reinvent as trustee of the Mermaid Trust no longer has any interest in Bliss. Action of that kind could never be justified by the kind of agreement that Dr Goodwin alleges existed between herself and Dr Day. 88 Third, the claim that Dr Day agreed orally to resign as a director of Bliss and, in effect, relinquish her interest at a meeting on 21 February 2020 is not supported by the evidence. 89 Dr Goodwin's first account of what occurred at the meeting that she says took place on 21 February 2020 was as follows (affidavit 1, para 74; affidavit 2, para 66): The next morning, 21st of February, Christine Day had a meeting with me in the house at [Benowa] and admitted it was all too much for her and she agreed I had already made my 'sweat equity' contribution, as Clare had outlined the day before. She confirmed again with me that she and Michael wished to apply for the old age pension and being company directors inhibited this, so she told me she wanted to resign from A Bliss and Reinvent Yourself. She hugged me and apologised for being useless at communicating. This was quite an amicable meeting and I agreed to do the paperwork, as I always had done. 90 Then, Dr Goodwin gave a different account in affidavit 3: After it was explained to her that I had earnt my 'sweat equity' at the meeting on February 20 2020, she agreed that she would rather just apply for the old age pension … I was concerned that she had begun sending random text messages clearly aimed at undermining our agreement. When I confronted her about this on February 21 she promised to be a better communicator and assured me, once again, that she would never 'burn' me as my former husband did. She resigned to me as director of the companies and beneficiary of the trust and instructed me to change the ASIC register as I had always done this work and she well knows these are companies I established. Here behaviour after this was extremely aggressive and erratic. 91 Instead of saying that there was an amicable meeting at which Dr Day said she wanted to resign, Dr Goodwin's affidavit 3 account was of a meeting at which she confronted Dr Day and then Dr Day orally resigned as director and beneficiary and then instructed Dr Goodwin to change the records. There are substantive differences in the accounts. 92 Further, the evidence in the affidavits is in stark contrast to the terms in which Dr Goodwin recorded the events of 20 and 21 February 2020 in her long email to Dr Goodwin of 29 February 2020. As I have noted, the version of the meeting on 21 February 2020 set out in that email made no reference to any resignation. Rather, it claimed that at the meeting on 20 February, Dr Day had agreed that Dr Goodwin needed to be compensated for her sweat equity and then the next morning 'hugged me and promised me [she] would support [Dr Goodwin's] reimbursement and buyout of the business and [she] agreed to sign all of the documents put to [her] about that'. This more contemporaneous version is to the effect that documents would be put to Dr Day for her signature to give effect to the sweat equity contribution. It is a completely different account. 93 Dr Goodwin was cross-examined concerning the alleged meeting on 21 February 2020 by reference to a minute of a meeting of the trustee of the Mermaid Trust that Dr Goodwin agreed she had signed. The minute was in the following terms: Minutes of Trustee Meeting Deed of Amendment - Change of Beneficiaries Mermaid Holdings Trust Attended by the parties as themselves or as a director of an entity as described in the Deed of Amendment. Held at: [Address at Benowa being the home of Dr Day] Date: [Inserted in handwriting as 21/2/2020] Time: [Inserted in handwriting as 8 AM] Present: [Inserted in handwriting as Bridget Goodwin and Christine Day] Chairperson: [Inserted in handwriting as Bridget Goodwin] Quorum: The Chairperson noted that a quorum was present … Amendment: The Chairperson tabled a Deed of Amendment … Trustee Resolutions: It was resolved to adopt the amendments to the trust Deed as contained in the Deed of Amendment by execution the Deed Meeting closed: There being no further business the meeting was declared closed. Confirmed as a true and correct record. [signed by Dr Goodwin] 94 Dr Goodwin was cross-examined on the basis that there could not have been a meeting on 21 February 2020 at 8.00 am as described in the minute because of email exchanges (quoted above) which showed that Dr Goodwin had a conflicting appointment. Dr Goodwin maintained that the meeting had taken place, but gave conflicting evidence as to the time that it occurred. Her own affidavit account of the meeting which she says occurred on 21 February 2020 is contrary to a deed of amendment being presented to Dr Goodwin at the time. Dr Goodwin gave no evidence to that effect. Rather, her only claim was that Dr Day orally 'resigned' as a beneficiary, not that there was a decision to amend the trust deed. 95 When confronted with the details of the emails exchanged concerning the arrangements for the meeting that was eventually held on 20 February 2020, Dr Goodwin filed a submission in which she said: Christine Day's submission that she attended a medical appointment on February 21 2020 has the factual rigour of the age old excuse to a teacher from a student that 'the dog ate my homework'. Her assertion is true but incomplete and misleading. I very well recall meeting with her after this medical appointment and after the training I did online at the house at [Benowa]. To say that she attended a medical appointment so could not have met with me is frankly yet another lie from Christine Day. (emphasis added) 96 However, when confronted in cross-examination with the fact that the minute she had prepared to support the amendment to the deed referred to a meeting at 8.00 am, Dr Goodwin insisted that the meeting had taken place before the training that she did. She then resorted to claiming that the difference in times did not matter because the meeting happened. 97 Dr Day deposed that no meeting was held at 8.00 am on 21 February 2020 or at any other time for the purpose of resolving to adopt amendments to the trust deed for the Mermaid Trust. Further there was no meeting on 21 February 2020 and no meeting had occurred as which she agreed to resign as a director of Bliss and Reinvent or as a beneficiary of the Mermaid Trust. Dr Day maintained that position when cross-examined by Dr Goodwin appearing on her own behalf. 98 Dr Day deposed: At no time have I ever agreed to resign as a director of [Bliss and Reinvent] nor have I ever agreed to transfer my shares in those companies to [Dr Goodwin]. I have never authorised her to lodge any documents with ASIC to record those changes. Further, at no time have I ever agreed to retire as a beneficiary of the [Mermaid] Trust and to be replaced by [Dr Goodwin]. It was never the case that I agreed to hold these positions on a temporary basis and to be ultimately replaced by [Dr Goodwin]. 99 I was invited to find that Dr Goodwin was not a reliable witness and her evidence should be rejected for that reason. Given the narrow compass of the issues to be resolved on the present application, I am not prepared to make such a finding. Further, it is not necessary to decide whether there was some form of discussion between Dr Day and Dr Goodwin early in the morning of 21 February 2020. Rather, I find that by reason of the inconsistencies in the evidence of Dr Goodwin concerning what she said occurred on the morning of 21 February 2020, her inconsistencies as to when the meeting took place, the divergence of her oral testimony from the matters recorded in her email of 29 February 2020, the fact that the meeting of 20 February 2020 was convened by Dr Day to raise concerns with Dr Goodwin about the returns to Dr Day for the $250,000 that had been provided by Dr Day and her husband to purchase the shares in Bliss (and therefore it was unlikely that it would result in Dr Day simply resigning the next day), I found the account of Dr Goodwin to be unreliable and I do not accept her evidence as to what occurred on 21 February 2020. 100 Accordingly, for the reasons I have given and noting the seriousness of the factual basis for the claims made by Dr Day, I find: (1) It is not necessary to make findings as to the existence or terms of any agreement made between Dr Day and Dr Goodwin concerning the shareholding in Bliss, the beneficial interest in the Mermaid Trust and the management of Bliss and Reinvent. (2) On the evidence adduced by Dr Goodwin, the nature of the underlying agreement she claims to have reached with Dr Day is not of a kind that would entitle Dr Goodwin to call for a transfer of all of the shares in Bliss to Dr Goodwin. (3) The shares in Bliss were purchased by Reinvent as trustee of the Mermaid Trust. (4) Dr Day did not orally resign as a director of Bliss and Reinvent on 21 February 2020. (5) Dr Day did not renounce her interest as a beneficiary in the Mermaid Trust on 21 February 2020. (6) There was no meeting of Reinvent as trustee of the Mermaid Trust on 21 February 2020 and the minute to that effect is a false document. (7) There has been no transfer of the shares in Bliss by Dr Day to Dr Goodwin. (8) There has been no decision made by Dr Day as director of Bliss to change the registered office of Bliss. (9) There was no resolution to appoint Dr Goodwin or Mr Anderson as directors or secretaries of Bliss. (10) The documents lodged by Dr Goodwin as part of the ASIC register for Bliss in early March 2020 were to the knowledge of Dr Goodwin each false as to their material particulars. (11) Since the commencement of these proceedings, Dr Goodwin has caused false documents to be lodged as part of the register of Reinvent. 101 Therefore, the factual basis for the claims made by Dr Day have been made out. I now turn to consider the nature and extent of the relief sought.

Alleged substantial injustice to Dr Goodwin 102 It is first necessary to consider the contention by Dr Goodwin that the relief sought concerning the rectification of the register should not be granted because substantial injustice would likely be caused to Dr Goodwin. As has been noted at the outset of these reasons, relief rectifying the register must not be granted unless the Court is satisfied that there will be no such substantial injustice. 103 Dr Goodwin says that any such order would be unjust because Dr Day has breached her agreement and Dr Day is not able to run the business because she has 'no idea, skills or inclination to do so' and Dr Goodwin's skills and qualifications are needed to run the business. She says that if Dr Day is allowed to take over control of the business of Bliss then the business will continue to be damaged and worthless. 104 In Car Buyers Australia Pty Limited v Australian Securities and Investments Commission [2020] FCA 599 at [31]-[32], Gleeson J summarised the views that have been expressed as to the substantial injustice negative requirement in s 1322(6)(c) of the Corporations Act in the following terms: Section 1322(6)(c) imposes a requirement that, before the Court exercises the power in either s 1322(4)(c) or s 1322(4)(d), the Court must be satisfied that 'no substantial injustice has been or is likely to be caused to any person'. This requires the Court to consider the effect of the irregularity sought to be cured, and the effect of the proposed order: An v Joo [2019] NSWSC 39 at [34]. For there to be 'substantial injustice', there must be a real and not insubstantial or theoretical prejudice: Elderslie Finance Corp Ltd v Australian Securities Commission [1993] WASC 465, (1993) 11 ACSR 157 at 160. Whether there is real injustice, the Court must weigh any prejudice that would be suffered if the order is made against the prejudice suffered by the corporation and its directors and officers if an order was not made: Gangemi v Osborne [2009] VSCA 297 at [62]. Finally, even if the above preconditions in s 1322(4) and s 1322(6) are satisfied, the Court has a residual discretion to refuse to grant relief under s 1322(4): Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd (No 2) [2018] WASC 357 at [35]. The public interest is a relevant consideration in the exercise of that discretion: Lock, Re Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93 at [98]-[99]. 105 In Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 at [11], French CJ applied the following view of Bowen CJ in Eq in Re Compaction Systems Ltd [1976] 2 NSWLR 477 at 493: [T]he word 'injustice' in this provision requires the Court to consider any real, and not merely insubstantial or theoretical, prejudice … it is insufficient to show that there may be some prejudice to a member if, on a consideration of the whole matter, the overwhelming weight of justice, as it were, is in favour of making the order. 106 In Super John Pty Ltd v Futuris Rural Pty Ltd [1999] NSWSC 627, Santow J said at [14]: [D]etriment per se is not the same as substantial injustice; that must depend on whether the remedial order in giving rise to that detriment is unjust in the sense of causing such prejudice overall as to be unfair or inequitable, taking into account the interests of all of those directly affected by such dispensation. 107 The commercial interests of the company the subject of the application is not a matter to be taken into account in determining the question of substantial injustice. Such matters are for the directors and shareholders: Re Allied Resource Partners Pty Ltd [2017] FCA 1451 at [172] (Markovic J). 108 I have doubts as to whether concerns of the kind raised by Dr Goodwin, even if established, would mean that there would be substantial injustice of the kind contemplated by s 1322(4)(b) of the Corporations Act if the orders sought were made. The injustice referred to is that which is consequent upon the register being altered. For example, if it were the case that third parties had dealt with Bliss on the basis that Dr Goodwin was the director and shareholder of that company and had advanced funds and taken security over the shares in Bliss then there could be injustice consequent upon the change to the register. I have found, as a matter of fact that Dr Day has not resigned as a director of Bliss. Dr Goodwin does not claim to have demonstrated a present legal entitlement to a transfer of the shares in Bliss with a consequent right to appoint herself as a director. Her claims are that there was an agreement by which she might earn a 50/50 interest and a breach of an alleged agreement by Dr Day and her husband in failing to expand the business of Bliss. 109 In any event, the alleged injustice raised by Dr Goodwin is a consequence of the nature of the arrangements as to ownership and control of Bliss that she participated in when the shares in Bliss were acquired. There is no dispute that those arrangements were made on the basis that (a) Dr Day would be the director of Bliss and Reinvent; (b) Reinvent would be the sole shareholder of Bliss in its capacity as trustee of the Mermaid Trust; and (c) Dr Goodwin would work for Bliss. Dr Goodwin claims that she was entitled to earn some form of interest by 'sweat equity'. She also claims that there was an agreement by which Dr Day and her husband would expand the activities of the business conducted by Bliss. However, in the meantime the structure of the arrangements were such that Dr Day was the director of Bliss and Dr Goodwin would work for the business. 110 Further, the consequences that Dr Goodwin complains of could only occur if Dr Goodwin was to cease her involvement in the business and Dr Day took no steps to secure some other person to undertake a similar role. Even if that did occur or was threatened (and the evidence does not establish that to be the case) then any injustice would be the consequence of those further actions, not the fact that the register had been rectified. 111 Finally, even on the case advanced by Dr Goodwin as to the nature of the agreement, her sweat equity was to be the means by which she would earn a 50% interest in the business, not a basis upon which she would become the owner of Bliss to the exclusion of Dr Day and her husband. As to the claim that Dr Day and her husband have breached the agreement by not taking steps to expand the business, even if there was such a term to an agreement (about which I express no view) I note that Reinvent has only owned the business for a very short period of time and the very general observations in the Two Year Plan on which Dr Goodwin relies contemplated what might be done over a two year time horizon. In any event, breach of such a term (if established) would not entitle Dr Goodwin to a remedy by which she might assume ownership of Bliss. 112 Therefore, there is no injustice to Dr Goodwin in having the false state of the ASIC register for Bliss which Dr Goodwin herself caused to come into existence to be reinstated so that the register is correct. Indeed, there would be injustice if Dr Goodwin's actions were to remain unremedied and the false state of the record were to remain in place. It would mean that the register of Bliss would not accurately record the position as to important details of the company. Those details are commonly relied upon by third parties in their dealings with Bliss. There is the potential for Bliss to be affected by dealings with third parties made on the current state of the register (although there is no evidence of any such occurrence up until this point in time). Further it would mean that by unlawful action rather than due process, Dr Goodwin would have secured control of Bliss in circumstances where Dr Day and her husband had contributed $250,000 to purchase the shares in Bliss just some six months before the changes to the register. Justice requires Dr Goodwin to advance any claim based on the agreement with Dr Day or in the courts if resolution cannot be reached between the parties. It does not require sanctioning the behaviour of Dr Goodwin in relation to the lodgement of false documents with the ASIC.

Rectification of the register 113 For reasons I have already given, the orders sought as to rectification of the register should be granted.

Cancellation of the corporate key 114 On the evidence, Dr Goodwin has, in the past, been authorised to lodge documents with ASIC concerning Bliss. On the findings I have made, Dr Goodwin has exercised that authority to lodge false documents. Dr Day seeks orders that would ensure that Dr Goodwin no longer has access to the corporate key details that would enable Dr Goodwin to lodge further documents with ASIC. For reasons I have given, those orders should be made.

Injunctions restraining Dr Goodwin from lodging further documents with ASIC 115 I have concluded that Dr Goodwin has lodged false documents. That conduct is a contravention of s 1308(1). Dr Goodwin has maintained in the course of these proceedings that she was entitled to lodge the documents that were lodged in early March. Dr Goodwin has offered no undertaking and made no indication from which the Court could conclude that there is no risk that Dr Goodwin will refrain from making similar lodgements in the future. Since these proceedings were commenced Dr Goodwin has lodged false documents as to Reinvent. The orders in relation to the corporate key should provide the protection that Dr Day seeks. However, in view of the past conduct of Dr Goodwin and the position that she adopted in these proceedings I am satisfied that the injunctions are appropriate to restrain Dr Goodwin from engaging in any similar conduct in the future.

Injunctions restraining Dr Goodwin from holding herself out as an officer of Bliss 116 The evidence establishes that Dr Goodwin communicated with a number of parties who had dealings with Bliss on the basis that she was the true owner of the business conducted by Bliss and was its director and shareholder and in doing so referred to or produced extracts from the ASIC register to support that claim. It is an entitlement which she maintains in these proceedings. Again there is no undertaking and no indication from which the Court could conclude that there is no risk that Dr Goodwin will refrain from such conduct in the future. Repetition of such conduct has the potential to cause substantial harm to Bliss. The injunction sought should be granted. I note that the proposed terms of relief will enable Dr Goodwin's details to be included if in fact there is a basis to do so. This will allow for the future possibility that the circumstances in relation to control of Bliss may change in the future.

Declaratory relief as to the deed of amendment 117 For reasons I have given, the deed of amendment was invalid. There should be a declaration accordingly.

Costs 118 As Dr Day has been wholly successful on the present application there should be an order that Dr Goodwin should pay the costs of these proceedings. In order to ensure costs can be determined as efficiently as possible and in accordance with the Court's established procedures as stated in Court's Central Practice Note: National Court Framework and Case Management to the effect that the quantum of costs for a successful party should not be delayed and that the Court will 'where appropriate, facilitate the making of lump-sum costs orders at the determination of, or as soon as possible after determination of, liability and quantum, with the assistance of registrars' (at [17.1]) the costs should be assessed on a lump sum basis by a Registrar. 119 Dr Goodwin submitted that she was not in a financial position to meet any costs order. That is not a reason why the discretion as to costs should not be exercised in favour of Dr Day who has been wholly successful on the application.

Case management hearing on cross-claim 120 The matter raised in this Court includes the claims the subject of the cross-claim advanced by Dr Goodwin. The cross-claim was received informally at an earlier case management hearing but has not yet been filed. Once it has been formally filed and assuming Dr Goodwin seeks to proceed with the cross-claim then there should be a case management hearing to deal with the cross-claim on a date to be fixed. I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Colvin.

Corporations Act 2001(Cth)ss 1308, 1322, 1324

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

At a glance

Court

Decision date

Before

Source

Judgment (17 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (12)

Cited By (2)