In the matter of Ginzaparramatta Pty Ltd

Medium Neutral Citation: In the matter of Ginzaparramatta Pty Ltd [2025] NSWSC 620

Hearing dates: 26 May 2025

Date of orders: 26 May 2025

Decision date: 26 May 2025

Jurisdiction: Equity - Corporations List

Before: Black J

Decision: Leave granted to Defendants to withdraw an admission contained in an unfiled defence.

Catchwords: CIVIL PROCEDURE – Admissions – Admission of facts – Withdrawal of admissions – Where Defendant served a defence containing an admission necessary for Plaintiff’s standing to bring an oppression claim under ss 232 – 233 of the Corporations Act 2001 (Cth) – Where Defendant subsequently filed and served a defence withdrawing the relevant admission
COSTS – No order as to costs of the application – Defendants to pay Plaintiff’s costs thrown away by reason of the withdrawal of the of the admission

Legislation Cited: - Corporations Act 2001 (Cth) ss 231-234, 461, 1274D

Cases Cited: - Chiu v Sheh [2021] NSWSC 19
- Drabsch v Switzerland General Insurance Co Ltd (unreported), 16 October 1996
- Embedded Claims Pty Limited v Litigation Finance (Australia) Pty Limited [2023] FCAFC 30
- Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327; [2003] FCAFC 309
- Knox v Nile (2022) 160 ACSR 357; [2022] NSWSC 195
- Re Bluemine Pty Ltd (in liq) [2019] NSWSC 1807
- Re Dymocks Book Arcade Pty Ltd [2013] NSWSC 298
- SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816
- Treadtel International Pty ltd v Cocco (2016) 117 ACSR 176; [2016] NSWCA 360

Category: Procedural rulings

Parties: Eungshik Kim (Plaintiff/Applicant to IP filed 21.5.25)
Duk Tai Kim (First Defendant/Applicant to IP filed 22.5.25)
Ginzaparramatta Pty Ltd (Second Defendant/Second Respondent to IPs filed 21.5.25 and 22.5.25)

Representation: Counsel:
Mr M Youssef (Plaintiff)
Mr D P O’Connor (Defendants)
Solicitors:
H & H Lawyers (Plaintiff)
HIS Lawyers (Defendant)

File Number(s): 2024/405807

JUDGMENT – EX TEMPORE

Nature of the application

1. By Originating Process filed on 1 November 2024 the Plaintiff, Mr E Kim, seeks relief under ss 232 - 233 and aspects of s 461 of the Corporations Act 2001 (Cth) (“Act”) against the Defendants, Mr D Kim and Ginzaparramatta Pty Ltd ("Company").

2. I pause to note that that Originating Process has an essential assumption, at least in respect of the oppression claim, namely that Mr E Kim is registered as a shareholder of the Company so as to be a member of the company and have standing to bring that claim. Section 234 of the Act relevantly provides that an application for an order under s 233 of the Act may be made by a member of the company, and s 231 of the Act relevantly provides the circumstances in which a person becomes a member of a company.

3. The case law has indicated that a person who is not a registered holder of shares in a company, and not a member of a company, does not have standing to bring an oppression application nor, on the balance of authority, can he or she seek, in the oppression application, relief which will bring about his or her entry on the Company's share register so as to confer a standing that is otherwise absent: Treadtel International Pty ltd v Cocco (2016) 117 ACSR 176; [2016] NSWCA 360; Knox v Nile (2022) 160 ACSR 357; [2022] NSWSC 195 at [54].

4. Here, an issue now arises as to whether the Defendant should be permitted to maintain a Defence which puts in issue whether Mr E Kim, the Plaintiff, is a shareholder of the Company. That arises in circumstances where, in late December 2024, it appears that the Defendant sought to file a Defence, which was ultimately not filed, and served that Defence, which admitted that at least Mr E Kim was recorded as a shareholder of the Company on the records maintained by the Australian Securities and Investments Commission ("ASIC") and, at its highest, in paragraph 36 of the Defence, that the Plaintiff "as a shareholder" was never consulted about the hiring of any staff and had no basis to expect to be. I accept that at least that paragraph of that proposed Defence appeared, on its face, to admit that Mr E Kim was a shareholder in the Company. However, it must be recognised that that admission turns on a relatively complex question, often misunderstood in matters of this kind. The question whether a person is a shareholder of a company is partly a question of fact, depending on the content of the company's share register and the circumstances on which he or she was allotted or transferred a share, and partly a question of legal conclusions to be drawn from that fact. It is not apparent that either Mr E Kim, or the Defendant, had in fact made any inquiry to determine whether the company had a share register, at all, and if it did so, whether that share register recorded Mr E Kim as a shareholder, so as to make him a registered shareholder of the Company.

5. In the event, the Defendant subsequently filed a Defence, on 9 May 2025, which continued to admit the contents of the ASIC register, but now does not admit that Mr E Kim was a shareholder of the Company, so as to have standing to bring the oppression application and, in the corresponding paragraph to paragraph 36 of the earlier document to which I referred above, expressly pleads that Mr E Kim was not a shareholder of the Company.

Affidavit evidence

6. The parties led voluminous evidence in support of, and in opposition to, the application for leave to amend the Defence, which it will be possible to address relatively briefly. The Defendants read the affidavit dated 18 May 2025 of their current solicitor, Mr Cho, who referred to the circumstances in which he came to act for the Defendants in the proceedings, some time after they were commenced, and took steps to determine whether a Defence had been filed and found that it had not, and to the circumstances in which he then sought to file the current version of the Defence. He also notes that the previous unfiled Defence, on which the Plaintiffs now rely for the admission, had not been filed, but Mr O'Connor, who appears for the Defendants, fairly accepts that that is not to the point so far as it contained a relevant admission.

7. By his affidavit dated 9 May 2025, Mr D Kim, the First Defendant, in turn addresses communications with his earlier solicitor, referring to communication difficulties, reflecting both the fact that Mr D Kim claims to have poor English skills, and to be reliant on translation applications, and his former solicitor had only limited ability to write and read in Korean. Mr D Kim there refers to the circumstances in which the earlier Defence was settled, and sought to be filed, and claims that occurred after he had informed his then solicitor that he denied that Mr E Kim was a shareholder of the Company and said that he was only a lender to the Company. Mr Kim there refers to an agreement which was said to record that arrangement, although it was some time before that agreement was located and is said to have been located on his wife’s mobile phone as a photograph.

8. Mr D Kim also refers to issues said to affect ASIC's company records in respect of the Company, so far as they record Mr E Kim as a shareholder in the Company, and to a situation in respect of another company where ASIC reversed a change to the company information on the basis it had not been properly authorised. In any event, little turns upon what is shown in the ASIC records, because s 1274 of the Act only establishes a prima facie presumption of a matter stated in them in the absence of evidence to the contrary. The case law, most recently Embedded Claims Pty Limited v Litigation Finance (Australia) Pty Limited [2023] FCAFC 30 at [58], makes clear that that prima facie presumption has no application once evidence to the contrary is led, irrespective of the cogency or otherwise of that evidence to the contrary. It is apparent that here Mr D Kim leads evidence to the contrary, contesting the accuracy of the ASIC records so as to displace that presumption. Those records therefore do not have the benefit of any continuing presumption as to their accuracy.

9. The Plaintiff, in response, leads detailed evidence, including three affidavits of their solicitor, Mr Chan, dated 23 May 2025, 22 May 2025 and 21 May 2025, respectively, and an affidavit of Mr Hong dated 23 May 2025, to seek to establish the history of the proceedings and the late filing of a Defence which sought to put the shareholding status of Mr E Kim in issue; and to challenge Mr D Kim's claim that his former solicitor had limited skills in Korean. I proceed on the basis that there is at least an issue as to the circumstances in which the former Defence was sought to be filed, although it was not successfully filed, and at least a prima facie case, based on Mr D Kim's evidence, of a miscommunication between Mr D Kim and his solicitor in that respect. I accept that there was a long delay in seeking to address the implications of that miscommunication, including any failure to raise a challenge to Mr E Kim's shareholding in the Company.

Applicable principles and determination

10. It nonetheless seems to me clear that, on the authorities, leave to withdraw the Defence should be given. An earlier case, typically referred to in subsequent cases, is the judgment of Santow J in Drabsch v Switzerland General Insurance Co Ltd (unreported), 16 October 1996, which was followed and applied by Brereton J in Re Dymocks Book Arcade Pty Ltd [2013] NSWSC 298 and which I in turn followed in Re Bluemine Pty Ltd (in liq) [2019] NSWSC 1807 (“Bluemine”). The relevant principles were in turn summarised by White J in SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816 at [56], where his Honour observed that:

“It is legitimate and may be necessary to consider whether the party making the admission did so deliberately, or whether he did so in error, whether the significance of the admission has changed since it was made, for example by reason of other amendments... or whether new evidence has come to light... where a party who is legally advised and does not suffer any disability, deliberately and without mistake, admits liability in whole or in part, and there are no relevant changes of circumstance, prima facie, justice or fairness to both parties does not require it to allowed to change its mind."

11. First, it should be noted that this is not a case where it is suggested that Mr D Kim was under a disability, although he was plainly under a form of disadvantage in reviewing a Defence in English, where he was a Korean writer and speaker, and there is evidence of a mistake on his part, so far as his review was, in that situation of disadvantage, not adequate for the relevant purpose. Second, the principles noted by his Honour are qualified by the recognition by the Full Court of the Federal Court in Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327; [2003] FCAFC 309 at [18] that the question is one of the attainment of justice and that, as the case law has also noted, the Court is "after the truth" so that, in principle, an erroneous admission should be able to be withdrawn unless other factors outweigh that factor. I followed that proposition in Bluemine at [7].

12. Mr O'Connor in turn draws attention to the observations of Slattery J in Chiu v Sheh [2021] NSWSC 19 at [35] (“Chiu v Sheh”), where his Honour notes the significance of whether an admission was deliberately made and the difficulty where, in declining leave to correct an erroneous admission:

“The Court is put in the invidious position of appearing to suppress, or ignore, what [a party] claims is his true recollection [of a matter in issue] and forcing him to accept what he regards as a false claim."

13. It seems, to me, here, that the case for withdrawal of the admission is substantially stronger than the case that I considered in Bluemine, where I did not permit the withdrawal of an admission, and stronger than the case in Chiu v Sheh, where Slattery J granted leave to withdraw the admission. As I have noted above, the admission itself is, in part, an admission as to matters which are uncontroversial, namely, the state of the ASIC records, but of limited probative value, or other matters which go to the question of a possible purchase of shares, which would not give rise to registered ownership of the shares absent a transfer of the shares and an entry in the share register, and only in paragraph 36 was I taken to a direct admission of the shareholding, which again was not focused on legal ownership of the shares. Second, and importantly, the Act specifies the standing to bring an application of this kind, and the case law indicates the importance of establishing that standing, with the consequence that an application will be dismissed when that standing is not established. Conversely, there would be real difficulty in proceeding on a false basis, or an allegedly false basis, as to Mr E Kim's membership in the Company, where that has the consequence that the Court may grant a remedy which it should not grant.

14. I recognise that, here, the withdrawal of the admission may or may not have significant adverse consequences for Mr E Kim, which will only be known in due course. On the one hand, if the Company maintains a share register, and Mr E Kim serves a notice to produce it and it is produced, and it records him as a shareholder, then there will be little or no adverse consequence from this development. On the other hand, if the Company does not maintain a share register, or that share register does not record Mr E Kim as a shareholder, then the withdrawal of the admission may have significant adverse consequences including, in a worst case, that Mr E Kim does not have standing to pursue the proceedings, at least so far as they are an oppression claim, and they would be dismissed, either in respect of that aspect of the claim or generally. However, that is prejudice in a specific sense; while it has the consequence that Mr E Kim would have failed in the proceedings, he would have failed because he was bound to fail, because he did not have standing to bring the proceedings which he had brought. There is no relevant prejudice where justice is done in the particular case, although the outcome is adverse to the particular party. It seems to me that that prejudice, and the prejudice to Mr E Kim generally, can be addressed, to the extent that it is not the result of the proper determination of the proceedings on their merits, by an order that Mr D Kim pay the costs thrown away from withdrawal of the admission.

15. I am satisfied that that order should be made, here, where it is clear that the Plaintiff has no part in the late exposure of this issue, and is exposed to significant financial risk by the late withdrawal of the Defence. If the Plaintiff's case now fails, because he is not a shareholder in the Company, and he is forced to bring new proceedings to require a register to be brought into existence or to have his name entered into the register, then fairness requires that the Defendants pay the costs wasted, which may be the entire costs of these proceedings, where their failure to raise this issue in their initial Defence will have put Mr E Kim to that risk. I recognise that the Defendants may, in turn, have a claim against their former solicitor in that regard, if Mr D Kim's account of events is true, but that is a matter between them and the solicitor.

Orders and Costs

16. For these reasons, I will grant leave to withdraw the admission, and the Defence filed by the Defendants on 9 May 2025 may stand. I will do so on terms that the Defendants pay the cost thrown away by the withdrawal of the Defence, other than the cost of today. I will make no order as to the costs of today. An order for those costs should not be made in favour of the Defendants, because this application results from their need to address this issue. An order also should also not be made in favour of the Plaintiff, where it became apparent, at an early point in the application, that the application was likely to fail, and the Plaintiff pursued it notwithstanding that likely outcome.

17. I will also make orders providing for further evidence as to this issue, and I have in mind allowing two weeks for the Plaintiff's evidence and two weeks for the Defendants' evidence in response, which will be strictly limited to this issue. I will hear Counsel as to whether I should now allocate a hearing date, or list the matter for directions once more, once that evidence has been filed, and the parties have had an opportunity to evaluate what may emerge from enquiry as to the critical issue whether the Plaintiff has standing to pursue the proceedings that he has commenced.

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