Li v Ye

) v Rodrick [2013] QCA 372 John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 Joint v Stephens [2008] VSCA 210 Lewis (as liquidator of Doran Constructions Pty Ltd (in liq)) v Doran (2005) 219 ALR 555; [2005] NSWCA 243 LPD Holdings (Aust) Pty Ltd v Phillips (2013) 281 FLR 227; [2013] QSC 225 Lucy v Lomas [2002] NSWSC 448 Lukaszewicz v Polish Club Ltd [2019] NSWSC 446 Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 Munstermann v Rayward; Rayward v Munstermann [2017] NSWSC 133 Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342 Patterson v Humfrey [2014] WASC 446 Quick v Stoland Pty Ltd (1998) 87 FLR 371; 157 ALR 615; [1998] FCA 1200 Re a company; ex parte Shooter (No 2) [1991] BCLC 267; [1991] BCC 44 Re Brenfield Squash Racquets Club Ltd [1996] 2 BCLC 184 Re Enterprise Gold Mines NL (1991) 3 ACSR 531; (1991) 9 ACLC 168 Re Quest Exploration Pty Ltd (1992) 6 ACSR 659 Smith Martis Cork & Rajan Pty Ltd v Benjamin Corporation Pty Ltd (2004) 207 ALR 136; [2004] FCAFC 153 Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621 SX Projects Pty Ltd (in liq) v Battaglia [2018] NSWSC 1830 Taxa Australia Pty Ltd v Wang [2016] NSWSC 1913 Tzavaras v Tzavaras & Sons Pty Ltd [2023] NSWCA 168 United Rural Enterprises Pty Ltd v Lopmand Pty Ltd (2003) 47 ACSR 514; [2003] NSWSC 910 Watson v Foxman (1995) 49 NSWLR 315 Wayde v NSW Rugby League Ltd (1985) 180 CLR 459; [1985] HCA 68 White Constructions (ACT) Pty Ltd (in liq) v White (2004) 49 ACSR 220; [2004] NSWSC 71 Zhong v Shield Resources Pty Ltd [2023] NSWSC 1611 Texts Cited: ASIC, Regulatory Guide 217, "Duty to prevent insolvent trading" Category: Principal judgment Parties: Xuxu Li (First Plaintiff) Kevin Ross Waters-Marsh (Second Plaintiff) Xiaosi Chaney Qian (Third Plaintiff) Mana Assets Management Pty Ltd (Fourth Plaintiff) XCQ Holdings Pty Ltd (Fifth Plaintiff) Phoenix Group Australia Pty Ltd (Sixth Plaintiff) Feng Ye (First Defendant) Thomas Gem Stone Pty Ltd in its own right and in its capacity as trustee of the Ye Family Trust (ABN 39 218 802 573) (Second Defendant) Shield Formply Australia Pty Ltd (Third Defendant) Shield Resources Pty Ltd (Fourth Defendant) Shield Holdings Australia Pty Ltd (Fifth Defendant) Shield Holdings South Australia Pty Ltd (Sixth Defendant) Shield Hardwood Pty Ltd (Seventh Defendant) Shield Intermodal Pty Ltd (Eighth Defendant) Shield Equipment Qld Pty Ltd (Ninth Defendant) Shield Timber SA Pty Ltd (Tenth Defendant) Shield Biomass Energy Pty Ltd (Eleventh Defendant) Shield Equipment Pty Ltd (Twelfth Defendant) Shield Construction Material Group Pty Ltd (Thirteenth Defendant) Oz Plantation and Hewer Pty Ltd (Fourteenth Defendant) Representation: Counsel: M R Elliott SC / B Goodyear (Plaintiffs) J C Kelly SC / A E Maroya (Defendants)

Solicitors: Norton Rose Fulbright (Plaintiffs) Goh Lawyers (Defendants) File Number(s): 2024/125503

JUDGMENT

1. The parties are shareholders in what I will call the Shield Group of companies. The Shield Group is involved in a timber business, operating out of Queensland and South Australia.
2. The principal protagonists are the first plaintiff, Ms Xuxu Li, the second plaintiff, Ms Li's husband, Mr Kevin Waters-Marsh, and the third plaintiff, Mr Xiaosi Qian, on the one hand, and the first defendant, Mr Feng Ye, on the other. During the hearing, the parties adopted the convention of referring to these individuals by the given names by which they are known: Suzie, Kevin, Robin and Thomas respectively. I will do the same.
3. A chart showing the various members of the Shield Group, and how Suzie, Kevin, Robin and Thomas and their related corporate entities, as well as other entities, hold their shares, is attached. The document also shows of which companies the individuals are directors. Annexure 1 - Share Structure Diagram
4. During the hearing, attention focused on eight of the Shield Group companies: 1. Shield Resources Pty Ltd ("Shield Resources"), the fourth defendant; 2. Shield Hardwood Pty Ltd ("Shield Hardwood"), the seventh defendant; 3. Shield Holdings South Australia Pty Ltd ("Shield Holdings South Australia"), the sixth defendant; 4. Shield Formply Australia Pty Ltd ("Shield Formply"), the third defendant; 5. Shield Holdings Australia Pty Ltd ("Shield Holdings Australia"), the fifth defendant; and 6. three subsidiaries of Shield Holdings Australia, that is: 1. Shield Equipment Pty Ltd ("Shield Equipment"), the twelfth defendant; 2. Shield Timber SA Pty Ltd ("Shield Timber SA"), the tenth defendant; and 3. Shield Intermodal Pty Ltd ("Shield Intermodal"), the eighth defendant.
5. A document showing the shareholding in those companies, and their operations, is attached. Annexure 2 - Shareholding Table
6. Thomas is a director of each company in the Shield Group. Through his company, Thomas Gem Stone Pty Ltd, the second defendant ("Thomas Gem Stone"), Thomas holds the majority of shares in each company. Thomas said that he "was educated at Xiamen University in Economics" and that he "worked for [the] government of the PRC in the administration and management of timber resources from about 1991 to 1998, before going into business for myself".
7. He deposed that: "I have been involved in the timber industry in Australia and elsewhere for the past 17 or more years. I set up a plywood manufacturing plant in Beihai in the People's Republic of China in 2012. Part of the timber business I conducted after the Beihai plant became operational was the export of logs from Australia to the PRC for the manufacture of different varieties of plywood."

The claims in the proceedings

1. Suzie, Kevin and Robin (together, the "Plaintiffs") bring a number of claims against Thomas.
2. As articulated in their Amended Commercial List Statement, Suzie and Robin claim that they have been oppressed in the manner proscribed by s 233 of the Corporations Act 2001 (Cth) (the "Act") by Thomas's conduct in allegedly: 1. failing to agree, as Thomas is said to have represented he would, on a "fair" redistribution of shares in the Shield Group having regard to Suzie's and Robin's contributions to the business; 2. seriously mismanaging the construction of the sawmill located on a property at Nangwarry in South Australia owned by Shield Holdings South Australia (the "Nangwarry Property"); 3. engaging in various acts said to be attempts to "remove or diminish" Suzie; 4. diverting the funds of various companies in the Shield Group for his own benefit; 5. refusing to pay monthly payments due under a loan of $4.8 million from Judo Bank Limited to Shield Formply; 6. refusing to pay Suzie, Robin and Kevin arrears of salary and entitlements and refusing to repay loans advanced by Suzie and Robin to various companies in the Shield Group.
3. Suzie also makes a number of claims in relation to a property at Chinchilla in Queensland (the "Chinchilla Property") which is registered in the name of Thomas Gem Stone.
4. Suzie and Robin seek: 1. orders that Thomas and Thomas Gem Stone transfer to them and their associated companies: 1. for no consideration, their shares in Shield Resources, Shield Hardwood, Shield Formply, Shield Holdings Australia and Shield Holdings South Australia so that Suzie and Robin or their companies hold 30% and 20% respectively, a combined 50% share, in each of those Shield Group companies; and 2. for $31,309, [1] their remaining shares in those Shield Group companies, three-fifths to Suzie or her company and two-fifths to Robin or his company; 1. a declaration that the Chinchilla Property is held on trust for Shield Resources and consequential orders including that it be transferred to Shield Resources; 2. an order that Thomas be removed as a director of each of the companies in the Shield Group; 3. an order rescinding a resolution of Shield Holdings Australia made on 12 September 2023 pursuant to which family members of Thomas were appointed directors; and 4. orders that Thomas "repay" monies to certain companies in the Shield Group.

The wider background

1. All of these claims must be seen against the wider background that: 1. the relationship between the parties has irretrievably broken down; 2. the Shield Group is, if not actually insolvent, close to insolvency; 3. Thomas has, since November 2023, been excluded from any management role in the Shield Group; 4. none of the companies in the Shield Group has a functional board of directors; and 5. the affairs of the Shield Group are presently being conducted by the minority shareholders, Suzie and Robin, who have excluded Thomas from any management role, and who seek to have Thomas transfer to them his shares so they can somehow trade out of the Shield Group's present financial state.

The principal Shield Group entities

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

Shield Resources Pty Ltd

1. Shield Resources conducts a softwood log export business using a facility in Bordertown and the Nangwarry Property in South Australia.
2. This was the company in association with which Thomas and Suzie first conducted a timber business together. They started working in this way in 2016 having known each other previously through a series of unrelated activities. Thomas suggested to Suzie that they work together on a business that would manufacture timber veneer in Australia, export it to China to be used to manufacture formply, a timber composite used by concreters for formworking, with such formply then being imported into Australia for sale here. Thomas had an interest in a factory in China that made formply. He had previously imported formply from China to Australia.
3. Thomas and Suzie agreed that they would be directors and make decisions together, that Suzie would be the Chief Executive Officer on a salary of $150,000 per annum and have an initial 4% shareholding; 2% held in Phoenix Group Australia Pty Ltd ("Phoenix Group Australia"), a company associated with Suzie and Kevin, and 2% held by Thomas for her.
4. Suzie's initial 4% shareholding increased to 6% in 2019, evidently in recognition of the role she was playing in the company, and then to 30% in 2022 in recognition of her role in securing funding to refinance the purchase by Shield Holdings South Australia of the Nangwarry Property, where a sawmilling operation is currently to be carried out.
5. Thomas, through Thomas Gem Stone, now holds 69.5% of the shares in Shield Resources and Suzie, through Mana Assets, holds 30%. A non-party, evidently supportive of Suzie's position, Awake (K&T) Pty Ltd ("Awake"), holds the remaining 0.5%.
6. Shield Resources has been supported financially in two ways. First, it is supported by loans from external parties which were organised when Thomas was not able to locate funding. One of those parties is Mr Yuping Zhong who in December 2023 obtained a judgment for $1.5 million against Shield Resources. [2] That judgment, and a further amount due to Mr Wang Yang of $3 million, has not been repaid.
7. Second, Shield Resources has been supported by Suzie and Robin through the provision of loan funds. Suzie contends that she is owed some $1.3 million and Robin contends he is owed some $2.36 million as well as an amount in the order of US$1.6 million.

Shield Hardwood Pty Ltd

1. Shield Hardwood is the operator of a hardwood timber export business carried out at the Chinchilla Property.
2. In 2018, Thomas Gem Stone acquired the Chinchilla Property from which Shield Hardwood now conducts this business. There is controversy about the circumstances in which this acquisition took place. I refer to this below. [3]
3. Thomas, through Thomas Gem Stone, holds 94% of the shares in Shield Hardwood. Phoenix Group Australia holds the balance of 6%.

Shield Holdings South Australia Pty Ltd

1. Shield Holdings South Australia is the owner of the Nangwarry Property from which Shield Resources carries out the softwood timber export business. Its function is to hold that property.
2. Thomas, through Thomas Gem Stone, holds 69% of the shares in this company. Suzie, through Mana Assets, holds 30% of the shares and Awake holds the balance of 1%.
3. It was Suzie's role in procuring the refinancing of the loan taken out by Shield Holdings South Australia to purchase the Nangwarry Property that led to her shareholding in Shield Resources being increased from 6% to 30% in 2022.

Shield Formply Australia Pty Ltd

1. Shield Formply was once used by Thomas to conduct the formply import business to which I have referred. [4]
2. It is now the borrower of funds that have been used to finance the operation of the South Australian softwood timber export business, and is currently indebted to Judo Bank in the sum of $4.8 million.
3. Thomas currently holds 70% of the shares in Shield Formply, with Suzie and Robin holding 20% and 5% of the shares respectively. Ms Rita Zhou holds the remaining 5% of shares.

Shield Holdings Australia Pty Ltd

1. Shield Holdings Australia was incorporated on 9 May 2023 at a time when the parties were contemplating the "restructure" of the Shield Group to which I will return. [5]
2. Shield Holdings Australia is the ultimate holding company of: 1. Shield Equipment, which owns the sawmill production equipment at the Nangwarry Property; 2. Shield Timber SA, which is the proposed operator of the sawmill operation the Nangwarry Property; and 3. Shield Intermodal, which employs and manages staff in South Australia.
3. Thomas, through Thomas Gem Stone, holds 64% of the shares in Shield Holdings Australia, and thus, in effect, the three companies referred to in the preceding paragraph. Suzie, through Mana Assets, holds 20% and Robin, through XCQ Holdings, holds the remaining 16%.

The parlous state of the Shield Group

1. All parties agree that the relationship of trust and confidence that hitherto existed between Suzie, Kevin and Robin on the one hand, and Thomas on the other, has broken down.
2. Thus, in their closing submissions, Mr Elliott SC and Mr Goodyear, who appeared for the plaintiffs, accepted: "There is no question that the relations between Thomas, Suzie and Robin have completely broken down. They cannot continue in business together, and absent some other order better suited to address the present circumstances and rights of the respective parties, the appropriate order would appear to be one for the winding up of all companies in the Group … The relationship between the parties is the same across the Group - Suzie is Suzie no matter which director cap she may be wearing at any one time, and so is Thomas. Therefore, if the relationship between them has broken down to a degree to justify winding up on the 'just and equitable' ground, then it would do so for all companies [in the Group]."
3. Because of that breakdown in relations, none of the companies in the Shield Group has a functional board of directors.
4. There is also an issue as to the solvency of companies in the Shield Group.
5. In that regard, the parties' submissions focused on the question of the solvency of Shield Resources.
6. Shield Resources is the principal trading company in the Shield Group and, as I have said, exports softwood from South Australia, manages the lease agreement for the Bordertown facility, and manages the operational machinery in South Australia. It also employs all staff for the Shield Group, apart from in Queensland. Mr Elliott and Mr Goodyear submitted that Shield Resources "plays an integral part in the operations of the Shield Group" and is the "face of the Shield Group".

The test for solvency

1. A company is "solvent if, and only if, [it] is able to pay all [its] debts, as and when they become due and payable". [6] If Shield Resources does not meet that definition, it is necessarily insolvent. [7]
2. Mr Elliott and Mr Goodyear pointed to the recent summary by Black J of the principles concerning insolvency in In the matter of Pacific Plumbing Group Pty Ltd (in liq). [8] His Honour said the relevant test: "…adopts a 'cash flow test' of insolvency which turns upon the income sources available to the company and the expenditure obligations that it has to meet, although a balance sheet test can provide context for the application of the cash flow test [9] … In Quick v Stoland Pty Ltd, [10] Emmett J summarised the applicable principles as follows: 'In order to determine whether the company was solvent at a given time, it would be relevant to consider the following matters: • All of the company's debts as at that time in order to determine when those debts were due and payable. • All of the assets of the company as at that time in order to determine the extent to which those assets were liquid or were realisable within a timeframe that would allow each of the debts to be paid as and when it became payable. • The company's business as at that time in order to determine its expected net cash flow from the business by deducting from projected future sales the cash expenses which would be necessary to generate those sales. • Arrangements between the company and prospective lenders, such as its bankers and shareholders, in order to determine whether any shortfall in liquid and realisable assets and cash flow could be made up by borrowings which would be repayable at a time later than the debts'." [11]
3. In relation to the arrangements between the company in question and "prospective lenders", Black J said in In the matter of Custom Bus Australia Pty Ltd (in liq): [12] "The case law indicates that whether a company is able to pay its debts as and when they fall due and payable is a question of facts to be determined objectively and without hindsight in all the circumstances, including the nature of its assets and business, and the Court will have regard to commercial realities in that regard. [13] In assessing a company's capacity to pay its debts, the Court should have regard to all of the assets of the company as at the relevant time in order to determine the extent to which those assets were liquid or realisable within a timeframe that would allow each of the debts to be paid as and when they became due. Apart from an assessment of the company's own assets, regard can also properly be had to funds which the company can borrow, on a secured or unsecured basis, or otherwise obtain from lenders or shareholders and which were, as a matter of commercial reality, available to the company to enable its debts to be paid. The case law recognises that, in determining a company's solvency, the Court may have regard to the likelihood that it will have funds available to it from sources with which it has no formalised agreement or understanding, including loans from its directors or from third parties, at least if they are not repayable in the short term, and the company's ability to borrow funds can also be taken into account." [14]

The 1 June 2024 Facility Agreement

1. So far as concerns Shield Resources, in closing oral submissions Mr Elliott accepted that "[t]he solvency question ultimately turns on your Honour's view about the $12 million facility that [Suzie and Robin] have obtained".
2. Mr Elliott was referring to a "Facility Agreement" dated 1 June 2024 expressed to be between Mana Assets as borrower and Mr Zhongping Huang and Ms Jia Zhaou as lenders, according to the terms of which Mr Huang and Ms Zhaou have agreed to lend Mana Assets $12 million.
3. The Facility Agreement is dated 1 June 2024; the Saturday before the hearing of these proceedings commenced. Suzie said that she had first approached the lenders on 30 or 31 May 2024; the Thursday or Friday before the hearing commenced.
4. According to the terms of that Facility Agreement, the lenders have agreed to make available to Mana Assets a "facility" of $12 million to be applied by Mana Assets "for the purpose of the operational funding needs of the Shield Group from time to time" and for an "availability period" of five years.
5. An interest rate of 10% per annum is specified, but this is subject to cl 9 which provides: "9. INTEREST 9.1 Interest free period (a) Subject to Clause 9.1(b) below, no interest accrues on any Loan. (b) The Lender may issue the Borrower with written notice that interest will accrue on all Loans in accordance with Clause 9.2 on and from a date falling not less than one (1) Month after the date of the notice issued pursuant to this Clause 9.1(b). 9.2 Calculation of interest The rate of interest on each Loan is the Interest Rate. 9.3 Payment of interest (a) The Borrower must pay accrued interest on each Loan annually. (b) All accrued but not yet paid interest shall be paid by the Borrower to the Lender on the Final Repayment Date." (Emphasis in original.)
6. Thus, according to the terms of the Facility Agreement, the advance of $12 million is interest free unless the lenders decide otherwise.
7. The Facility Agreement makes no provision for security.
8. In cross-examination, Suzie said that: 1. she had met the lenders, who are a couple who live in "the Crown building" in Sydney; 2. the lenders had agreed to fund the needs of Shield Resources; 3. the terms on which the lenders had agreed to advance the funds were wholly contained in the Facility Agreement; and 4. the lenders had $12 million available to provide pursuant to the Facility Agreement and had shown Suzie, on their mobile telephones, their bank statement showing the availability of the funds.

The other funds available

1. The other funds that Suzie and Robin contend are available to Shield Resources comprise: 1. liquid funds of $2,635,229 in the bank account of Mana Assets; and 2. liquid funds of RMB¥6,524,799 in Robin's bank account.

The conditional availability of these funds

1. The funds that Suzie or Robin, through their companies, could make available to Shield Resources are not available unconditionally.
2. Thus Suzie deposed: "As I have previously said, I am reluctant to proceed with lending more money to the Shield Group in circumstances where Thomas is trying to wind the company up. I have no doubt these borrowings can be proceeded with should that attack on the company be removed."
3. Robin gave evidence to similar effect.
4. In cross-examination, Mr Kelly asked Suzie about a judgment entered against Shield Resources in favour Mr Yuping Zhong of $1,151,465.06 by Fagan J on 18 December 2023. [16]
5. This exchange occurred: "Q. Well, what I suggest is, Shield Resources cannot do it because it does not have the capacity itself, or by anyone who is supporting it, to pay that judgment debt. A. You're wrong. Q. Let us look at the situation today. Are you saying to the Court that Shield Resources has the financial capacity or a supporting avenue under which it can and will pay that judgment debt? A. Yes. Q. What is that source of funds? A. They will come from me or me and Robin, and to be most specific, it will come from me. Q. You're saying, are you, that you personally -- A. Yeah. Q. -- will lend to Shield Resources whatever money is necessary to pay that judgment debt? A. Yes. Q. There are no conditions to that support? A. When you say no conditions, what do you mean? Q. Is it a condition of your making those funds available to Shield Resources that the shareholding structure in Shield Resources should change? A. Shield - Shield, well, we're here today is to talking about the Shield - Shield's group's shareholding structures, but apart from that, which will be decided by - by this Court, and if the judgment come to us, to Shield Resources, and Shield Resources need to pay, I will provide that support. Q. Unconditionally? A. At this stage I think so. HIS HONOUR Q. Even if Mana's shareholding remains at 30%? A. Well, again, I said that's not my claim in this Court, and I'm expecting I would able to get the relief I'm asking for in this Court, and that meanwhile, and the business carry on as usual, and if the judgment coming at this stage saying okay, you've got to pay, this is amount, go pay it, and we have to pay it. Q. So you'll lend Resources the money to pay the Zhong debt, what, if you get the relief from me that you're asking for. Is that it? A. Okay, like - it's two different things, all right? One thing is if the judgment come - if whatever the proceeding is, and the Zhong's lawyer come to us say, this is judgment, this is what you need to pay, and then we have to pay it, and regardless what the structure is. Another thing is, I'm here today because all the reasons [I'm] telling your Honour, and why I think we should get relief from you, as another matter. If at the end of day, and we got the relief, and it separate from Zhong's matter. I - is that clear?" (Emphasis added.)

The expert opinions

1. Both sides adduced expert evidence in relation to the solvency of Shield Resources.
2. Suzie, Robin and Kevin relied upon a report from Mr Scott Kershaw of 21 June 2024.
3. Thomas relied upon a report from Mr Alan Walker of 19 June 2024 together with a "Solvency Report Memo" that Mr Walker prepared on 24 June 2024 which provides a summary of the "agreed and disagreed position" between the two experts.
4. Although time was allocated during the hearing for cross-examination of these experts, neither expert was cross-examined.
5. In his Solvency Report Memo, Mr Walker said that the following matters were common ground: "Both experts agree that [Shield Resources] is loss making and has recorded cumulative losses of $3.98 million for FY22-FY24. Both experts agree that no opinion can be provided as to the future financial performance of [Shield Resources] and whether it can service any new debt should it be secured given the lack of information provided. Both experts agree that there are material omissions in the Financial Statements provided. Both experts agree that [Shield Resources] may be insolvent on a balance sheet basis."
6. Mr Walker opined that Shield Resources is insolvent.
7. Mr Walker pointed to the general indicators of insolvency in the ASIC Regulatory Guide 217 [17] and concluded that six of those indicators were present, namely: 1. Shield Resources has a history of continuing trading losses; 2. Shield Resources is experiencing cash flow difficulties; 3. creditors are not being paid on agreed trading terms; 4. legal action has been commenced against Shield Resources and judgment has been entered against it; [18] 5. Shield Resources is unable to produce accurate financial information on a timely basis; and 6. it is not certain that Shield Resources has assets that can be sold in a relatively short period of time to provide funds to help meet debts owed, without affecting the company's ongoing ability to continue to trade profitably.
8. Mr Walker pointed out that "the company has previously been funded by shareholder loans and deferral of employee entitlements" and that both Suzie and Robin "have demanded the repayment of their loans in October 2023 and April 2024 respectively". Mr Walker also expressed scepticism as to the 1 June 2024 Facility Agreement and, evidently, did not take it into account when concluding "I do not consider that the company will be able to raise sufficient funds to meet its liabilities as and when they fall due".

Vcoco

1. On 6 October 2023, Robin, as Chief Financial Officer, sent Suzie and Thomas an email attaching a document entitled "Shield Debt Amounts as of 6 October 2023".
2. One of the debts recorded was to an entity described as "Vcoco" for $11.5 million.
3. That entry appeared to relate to another document known as the "Vcoco Trust Account Ledger" or the "Vcoco Family Trust Ledger" which, as Mr Elliott and Mr Goodyear accepted in their closing written submissions, "at first blush … looks like a ledger recording investments that Vcoco did in fact make".
4. Nonetheless each of Suzie and Robin gave evidence that, although Vcoco was initially interested in investing in the Shield Group, no investment was ever made.
5. However, on the face of it, the Vcoco Trust Account Ledger suggests that, as at 8 June 2023, Vcoco (whoever that is) had advanced $5,729,430 to one or other Shield Group entity, including substantial sums in cash and that, on one reading of the document, a further $6 million was to be invested.
6. In his affidavit, Robin said that: "I … created a spreadsheet ledger, titled 'Vcoco Trust Account Ledger' accounting for all of my friends I had borrowed money from, in order to lend to the Shield Group, who would be paid back from the Vcoco investment."
7. Mr Elliott and Mr Goodyear submitted: "In other words, it was simply a list showing people from whom Robin had borrowed money, and the amounts he borrowed (which he on-lent to the Shield Group). It was a list of people who Robin planned to repay, if Vcoco made the investment. As he explained at the hearing … Q. Why did you call the 'Vcoco Family Trust ledger'? A. Because, look, we were intending to repay this amount from Vcoco's investment."
8. The matter does not seem to be as simple as this.
9. The Vcoco Trust Account Ledger appears to suggest that, as at 8 June 2023, "Vcoco" had advanced to one or other Shield Group entity $5,729,430. Robin's 6 October 2023 document records an indebtedness from the Shield Group to Vcoco of $11.5 million.
10. Robin gave this evidence in response to my questions concerning the Vcoco Trust Account Ledger: "Q. I'll ask this question. What does this record? A. It's a record - look, as I said, look. Because of the Vcoco potential investment and - and the loan negotiation processing time, during - during the period of procession time, we were short of cash flow. Then I borrowed from one - from my friend, several friend. I said one of friends I borrowed from, one of the lender is Mr Oo who is based in - in Queensland. I borrowed around - I borrowed twice. One is in - there's August 2022, I borrowed $1.5 million from him. There's another one from January 2023, it's $1 million. He is in the show form of business and in construction industry. He said, 'Look, I have some cash. You want to borrow?' At that point in time no matter what kind of form of the funds, we have to take it. That's a reason, you know. He passed me around $2.5 million cash from - because that's from out of his out of tax pocket. That's the reason I borrowed that. Q. What do the transfers and cash deposits on this document record? A. That's, you know, look, for - for example the first one, that a cash deposit, you know. I put into Shield Resource's account. That's the amount I borrowed from my friend, Mr Oo, and the second one, yes, the second one, yes, I - that's the part of the $2.5 million cash. Then the third one, yes, it is, and then I have a look. Q. Why did you call [it] the 'Vcoco Family Trust ledger'? A. Because, look, we were intending to repay this amount from Vcoco's investment." (Emphasis added.)

Loans to the Shield Group by Robin's "friends"

1. On 29 September 2023, Suzie sent an email to Robin and Thomas suspending discussions in relation to the proposed "restructure" of the Shield Group. I will return to this subject below. [19] For present purposes, the point is that Suzie said in this email: "All the fund sourced by Robin and injected to Shield Businesses will be personal loan of Robin and Robin will be personally liable for the any liability raised from third parties."
2. Robin replied to the email, several hours later, saying "confirmed and agreed".
3. Robin gave this evidence in relation to the arrangement suggested in Suzie's email: "Q. The words, 'All the funds sourced by Robin and injected to Shield Businesses,' when you read that, you understood it to be a reference, did you, to the funds listed in a document that you had earlier circulated entitled Vcoco Family Trust. A. No, I didn't refer to the ledger. I didn't refer to all the funds I released from third parties. … Q. What amount of money did you have in mind when you first read a reference to all the funds sourced by Robin [and injected to] Shield Businesses? … A. Eight or nine million dollars from my memory as if we put the..(not transcribable)..on that particular date, 29 September 2023, my memory is around eight or nine million dollars. Q. So is this right, when you first got Suzie's email and read that numbered paragraph 5 and saw that she was telling you that all the funds sourced by you and injected to the Shield businesses will be a personal loan of you? A. Yes, because I -- Q. Let me finish. You understood her to be saying that some eight or nine million dollars would thus be taken up by you as a personal loan. A. Yes, I know that because those funds are from my friends, and the - then to me, then into the Shield Business, because if you don't know Shield Business, they don't know who Thomas are, who Suzie are - who Suzie is, who Thomas is, and they rely on me and if this new structure has to be stopped, then I personally need to stand out and to, you know, to pay the loan from my friends -"
4. Robin then gave this evidence in answer to questions from me: "Q. What did you understand Suzie to mean by [the paragraph set out at [94] above] ? A. Pardon? Q. What did you understand her to mean by what she wrote in paragraph- A. I understand because those friends I - I rang my friends or us an agreement- Q. No, no, no, what did you understand Suzie to mean when she wrote what's in paragraph 5 [in her 29 September 2023 email]? Being something to which you agreed, apparently. A. Yes, Suzie in - in the item five, Suzie said all the funds are raised. All the fund - all from - I've ordered from my friends, we all - I will be person reliable for those, and I agreed. I agree. Q. You mean liable to pay them to Shield? A. No, I - I'm liable to pay to my friends. I'm responsible for chasing the loans from Shield, and then repay to my friends. That's what my understanding was."

Conclusion on solvency

1. This evidence bespeaks a most unsatisfactory state of affairs concerning the financial records of the Shield Group.
2. The present position is that Shield Resources does not have the benefit of the facility purportedly represented by the 1 June 2024 Facility Agreement that Suzie has said Mana Assets would make available assuming she were to achieve success in these proceedings; that is, assuming that I were to order that Thomas transfer his shares in the Shield Group companies to Suzie and Robin in the manner I have set out above. Further, the present position is that Suzie, Robin and Kevin have demanded that the monies they contend are due to them, being the loans and unpaid salary, be paid.
3. Mr Kershaw's tentative opinion that Shield Resources is solvent is made on the assumptions that Mana Assets will be able to draw on the $12 million under the 1 June 2024 Facility Agreement, and on-lend that sum to Shield Resources, and that the shareholder entitlements of some $3.1 million are not due and payable.
4. As I have said, I have grave reservations about whether any funds are available to Mana Assets by reason of the 1 June 2024 Facility Agreement. In any event, Mana Asset's preparedness to advance any such funds to Shield Resources is conditional in the manner I have described; suggesting that, at the moment, Shield Resources is likely insolvent.
5. The position might be different were I to order that Thomas transfer his shares in the Shield Group companies to Suzie and Robin and were Mana Assets to draw on the $12 million under the 1 June 2024 Facility Agreement and on-lend those funds to Shield Resources. But even then, and assuming the correctness of the very tentative conclusions that Mr Kershaw has expressed, it is by no means clear to me that Shield Resources could continue to trade solvently.
6. Suzie has described her ambitions in this regard as follows: "If Robin and I were allowed to buy out Thomas's interest in the Shield Group companies, I would continue to operate all of the arms of the Business with a view to generating cash flows that could be used across the different activities, with the objective of making it an overall success and generating a return … I would be holding off seeking full payment of loan monies from the companies that owe me or Mana Assets money so as to allow this to happen."

Alleged oppression - principles

1. Section 233 of the Act enables the Court to make an order that a company be wound up or for the purchase of any shares by any member of the company.
2. Section 232 of the Act provides: "The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company."
3. There was no dispute about the principles to be applied.
4. They are: [21] 1. The test of oppression is an objective one of unfairness. [22] 2. The Court must look to determine whether on the balance of probabilities the objective commercial bystander would be satisfied that the affairs of the company were being conducted unfairly. [23] 3. A director may act oppressively in the sense relevant to the operation of s 232 and yet not breach any fiduciary or other duty owed as a director. [24] 4. Conduct of a company's affairs may be oppressive even though the conduct is otherwise lawful. [25] 5. Conduct that has the effect of paralysing a company in the operation of its business is properly characterised as conduct contrary to the interests of the members as a whole. [26] 6. A shareholder of 50% of the shares in a company can seek relief for oppressive conduct because they do not have control in the form of power to prevent the oppression, particularly where individual strong arm tactics are used. [27] 7. The Court must formulate an opinion about oppression or unfair prejudice as at the date of the institution of proceedings and the issue of relief under s 233 must be determined as at the date of the hearing. [28] 8. The discretion under s 233 is wide as to the appropriate remedy. [29] 9. The nature of the remedy chosen by the Court under s 233 will be dependent upon the conclusions drawn by the Court as to the type of oppression with which the Court is dealing and the Court will choose the remedy which is least intrusive. [30] 10. The aim of any order under s 233 must be to put an end to the oppression. [31] 11. The Court should only look to wind up an otherwise solvent company as a "last resort". [32] 12. As a remedy for oppression, an oppressor can be ordered to sell their shares to the oppressed party. [33] 13. If an order is to be made for the purchase of shares under s 233 the task of the Court is to fix a price that represents a fair value in all the circumstances. [34]

Alleged oppression - the "restructure"

1. Mr Elliott and Mr Goodyear described this claim as the "backbone" of the Plaintiffs' oppression claim.
2. The allegation in the Plaintiffs' Amended Commercial List Statement is that: "From time to time, Thomas has represented to Suzie and Robin that the ongoing financial support that Suzie and [Robin] [38] were providing in these regards would be recognised and rewarded when there was a restructure of the Shield Group later on, at which time they would sit down and agree on a fair distribution of shares in the Shield Group companies having regard to their contributions to the Business, including their ability to source and obtain funding for its continued operations and survival."

The course of events concerning the restructure

1. Suzie's evidence concerning the restructure commenced with her account of a conversation she said she had with Thomas in around 2017.
2. At that time, Suzie had, in effect, a 4% shareholding in Shield Resources. Thomas personally, or through Thomas Gem Stone, held the remaining shares in the Shield Group.
3. Suzie deposed that Thomas said: "Thomas said to me and Robin … that we would have a three-way relationship each bringing our own skills - Thomas as timber expert, me in the CEO role … and Robin looking after financial management. … Thomas said … that we would all need to sit down later once the funding for the major works required to build the factory had been sorted out, and agree then on a fair split of the shares between us."
4. Suzie said that in March 2018 she had another discussion with Thomas "along the same lines" and that: "Thomas said to Robin and me that we were so important to the Business and that we were 'unbreakable' and 'like an iron triangle'. He said that right now he was holding the shares for all of us, but when funding arrived for the major works, he would redistribute the shares as part of a restructuring of the Business and its ownership. He referred to this future 'restructure' on a number of occasions over time."
5. Robin said that in around late 2018: "… Thomas said that once the Shield Group was profitable and we obtained investments from third parties, Suzie, Thomas and I would sit down and work out how we should allocate the shareholdings to reward us for our respective efforts."
6. As Mr Kelly and Mr Maroya pointed out, the evidence of Suzie and Robin is consistent insofar as it suggests an agreement to agree upon some future date, but is inconsistent insofar as it concerns the occasion when any such negotiation was to take place. Suzie said it was when funding for building the factory had been "sorted out", [39] whereas Robin said it was when the Shield Group had achieved "profitability" and "investments from third parties". The two are, obviously, very different.
7. Suzie also deposed: "… from June 2021 to 23 April 2023, I did not receive any salary or superannuation payments. In around May 2021, Thomas spoke to me and said to me that the Business could not afford to pay me any salary or superannuation, and he told me that I would be rewarded for my patience when the restructuring occurred."

Events in 2023

1. By 2023, relations between Thomas and Suzie had deteriorated. Thomas deposed that: "Since February 2022, things have been very tense between Suzie and myself. We are barely on speaking terms. When we do speak, our conversation always ends up in an argument. Suzie blames me for her giving a mortgage over her home and a personal guarantee to support the borrowing that she negotiated to complete the purchase of the [Nangwarry Property]. On a number of occasions in 2022 and 2023, including the time the funding arranged [in relation to the Nangwarry Property] was refinanced … Suzie said to me words to the effect: 'You do not know how to run a business. You made a mess of funding Nangwarry. You should leave it to me and Robin to run the business.' I said words to the effect: 'I established the business. You seem to be moving in and taking over' … My relationship with Robin also soured after he gave a personal guarantee in support of the purchase of the [Nangwarry Property]."
2. Nonetheless, there were further talks about restructuring in 2023.
3. In around May 2023, Suzie and Robin proposed that the shareholding in the Shield Group be split 50:30:20 between Thomas, Suzie, and Robin.
4. On 9 May 2023, and as a part of a proposed restructure, Shield Holdings Australia was incorporated as a holding company for the Shield Group. On incorporation, its shares were held 50:30:20 by the three companies associated with Thomas, Suzie, and Robin: Thomas Gem Stone, Mana Assets and XCQ Holdings. This evidently reflected the shareholding structure that Suzie and Robin then proposed.
5. On 22 May 2023, Thomas and Suzie had the following exchange via WeChat messages: "[Thomas] Good morning to both of you! In order to regulate the management of the company and comply with Australian laws, here is my personal statement, specifically inform everyone. [Suzie] Let's find some time in the next couple of days to have a meeting and clarify all the issues, so we can avoid any misunderstandings and suspicions. It's not been easy for the three of us to get to where we are today. If there are any issues, let's address them face to face and resolve them directly. I don't like suspicion or internal strife. [Thomas] I am the founder of the company and the sole majority shareholder. I have no rivals and no motive. The label of internal strife doesn't apply to me. One of you is my close neighbor and fellow-townsman, and the other is a long-time friend I've known for over twenty years. I'm much older than both of you, and as the elder brother, I fully trust both of you. At the same time, you have both contributed a lot. I have led everyone with dedication and hard work. I am very busy on work, now that we are close to reaping the rewards, I have little energy left. I'm confident that I have the vision for this situation. You both are smart people. I just want to know who initiated the following two documents. I really want to know where I have let everyone down all this time?"

The "coercion"

1. Suzie and Robin contend that they only agreed to the 64:20:16 ownership split because of what Mr Elliott and Mr Goodyear described as Thomas's "threat of a nuclear option".
2. It was hardly that, even on Suzie's and Robin's account.
3. Suzie said that in around June 2023: "[Thomas] said that if we did not agree to a deal under which he had the majority ownership, he would stop works at the Nangwarry Property and just walk away, and would not cooperate with any efforts to refinance the [Nangwarry Property] to a new lender, which would be a problem for us as [the existing lender] had issued a default notice and … had the personal security Robin and I had provided for that loan, which included the house that I lived in."
4. Robin gave evidence to similar effect.
5. Suzie said: "Because of Thomas' threat about what would happen if we did not agree to majority ownership, I gave in to Thomas' demand for it. I said to Robin that I felt like we had no choice about it, as the alternative Thomas was threatening was something I could not risk. He said he didn't think we had any choice. I hoped that the potential new investor would be able to come in, and after that happened, things would end up working out better and the new investor, Robin and I could work together to ensure that the Business was run properly and we were all treated fairly."
6. Robin deposed: "Suzie said to me that she felt she did not have any choice given what Thomas was threatening to do. She said to me that Thomas had assured her that even though he was saying he wanted majority ownership, the Shield Group would continue to be operated and directed by the three of us as it had been. I said that was good, as it would enable Suzie and I to work together if Thomas wanted to do things we did not agree with."
7. Suzie said that, during these discussions: "Thomas said to me that I did not need to worry about how the Business would be run and decisions would be made, and that things would continue on in the same way, whatever was on paper. I understood from this that Thomas was saying that Robin, Thomas and I would continue to direct the business, that I would remain as CEO and Robin as CFO."
8. Thomas disputed this. He gave this evidence in cross-examination: "Q. You had spoken with Suzie and Robin about a restructure during 2023? A. INTERPRETER: If my memory is correct, only when I received a notice of restructure on 22 May 2023 I - as the first time I learnt about the issue of restructure. Q. In mid-2023, you knew that Robin and Suzie were saying that they should own 50% of the Shield companies? A. INTERPRETER: Yes. At that time, I was very angry. They just did all that. They just want to steal the company from me with - yeah, with some bad intention. Q. You were angry that they were now asking you to honour the promise that you had always made; correct? A. INTERPRETER: No. Q. But you were very angry? A. INTERPRETER: I have the record for that. Q. But you were very angry? A. INTERPRETER: Yes. Q. You told them that if that was their position, you would walk away from the Shield Group? A. INTERPRETER: That's nonsense. Q. You told them that you were the only one that could complete the construction of the sawmill in South Australia, didn't you? A. INTERPRETER: Yes. Q. You said unless they agreed to your shareholding proposal, you would walk away; correct? A. INTERPRETER: That's nonsense. I'm the owner of the company. I don't have a reason to walk away."

The 12 September 2023 general meeting

1. On 12 September 2023, Thomas convened a meeting of shareholders of Shield Holdings Australia to consider a motion to appoint "three additional directors", being his wife and two family members.
2. The motion was carried, over Suzie's and Robin's objections.
3. I deal with this below, under the heading "Alleged oppression - attempts to remove or diminish Suzie". [42]

The 29 September 2023 board meeting

1. On 27 September 2023, Thomas sent Suzie a WeChat message requesting a meeting of the board of Shield Holdings Australia. The meeting was held on 29 September 2023. This was the first such meeting of that board.
2. Suzie has deposed that at that meeting Thomas proposed, without notice, that she be removed as Chief Executive Officer of Shield Holdings Australia and that he be appointed in her place.
3. Thomas gave this account of that meeting: "During the course of the meeting an argument occurred about management control. Amongst other things, Suzie said words to the effect: 'I want to be the CEO of all companies in the group. You cannot manage any of them.' I said words to the effect: 'I started this business. I should be the CEO.' Robin said words to the effect: 'I need to be the CFO.' The meeting ended when Robin stormed out of the room."

Suzie's termination of the restructure discussions

1. Suzie evidently saw this as a departure from what she had understood Thomas to mean when he had said "things would continue on in the same way, whatever was on paper". [43]
2. Thus, she sent this email to Thomas and Robin: "As a result of the discussion today, the restructure of Shield businesses can not be proceeded further. Therefore I request below: 1. Stop the restructure of Shield businesses immediately. 2. Terminate the Trust Deed of Shield Holdings Australia Unit Trust immediately. 3. Restore the business structure to pre-restructure stage immediately. 4. Withdraw the Subscription Agreement with Vcoco immediately. 5. All the fund sourced by Robin and injected to Shield Businesses will be personal loan of Robin and Robin will be personally liable for … any liability raised from third parties."
3. Later that day, Robin sent an email stating his agreement with the five propositions set out in Suzie's email.
4. There is no evidence that any step was taken in response to Suzie's and Robin's "request" that the "restructure of Shield Business" be stopped "immediately" or that the "Trust Deed of Shield Holdings Australia Unit Trust" be "terminated immediately".
5. What appears to have happened is that Suzie, with Robin's support, has sought unilaterally to put to an end the arrangements agreed in July 2023.
6. I have received no submissions as to what, if any, legal effect those actions had.
7. Those actions appear to have been born of the events in September 2023, to which I have referred, [44] rather than because of any "coercion" leading to the execution by Suzie and Robin of the 12 July 2023 documents.

Conclusion on restructure

1. Thus, on Suzie's and Robin's account of it, Thomas invited Suzie, and later Robin, to participate in a business that he founded. Each of Suzie and Robin made a substantial contribution to the business, both in its day to day activities but also in advancing funds to the business and working without salary. Thomas told them that, in due course, the three of them would sit down, discuss and endeavour to agree on a fair redistribution of shareholding in the Shield Group. They did this in about July 2023. Suzie and Robin proposed a 50:30:20 split. Thomas insisted on a 64:20:16 split: an outcome that involved some movement by Thomas but not as much as Suzie and Robin wanted. The result has not been shown to be so commercially unfair to amount to oppression. Ultimately, as relations continued to deteriorate between the parties, it was Suzie who sought to "stop the restructure".
2. I see no basis on which to describe Thomas's conduct as being oppressive.

Conduct of the company's affairs?

1. In any event, s 232 of the Act is only engaged if it is shown that, relevantly, the conduct of the affairs of the company in question is oppressive to a member of the company.
2. Thus it has been said that "the statutory remedy relates to acts done in the conduct of the affairs of the company or to acts or omissions of the company". [45]
3. The dispute here relates to the conduct of the shareholders inter se. The conduct does not concern the business or affairs of the companies in the Shield Group. The Plaintiffs do not allege that any of the companies in the Shield Group was a party to any agreement or representation or to the negotiations in July 2023 of which Suzie and Robin complain.
4. Even if what I have described could somehow be seen as the conduct of the affairs of any one of the companies in the Shield Group, its remoteness from the companies' separate existences to those of Suzie, Robin and Thomas, would cause me not to exercise the discretion under s 233 to, relevantly, make an order for the purchase by one member of the shares of another.

The acquisition of the Chinchilla Property

1. As I have said, the Chinchilla Property is in Queensland and is the site from which Shield Hardwood conducts a hardwood export business.
2. Since December 2018, Thomas Gem Stone has been the registered proprietor of the Chinchilla Property. As I have said, [46] the Plaintiffs seek an order that Thomas Gem Stone transfer the Chinchilla Property to a nominee of Shield Resources.
3. To understand the context in which that claim is made, it is necessary to examine the events leading to Thomas Gem Stone's acquisition of the property.
4. Suzie said that on 27 August 2018 she had a conversation with Thomas in which Thomas told her that: "(a) since the Chinchilla Property was being purchased for the Shield Hardwood (Chinchilla) Log Export Business - part of the Shield Group's Business - Shield Resources should pay for the Chinchilla Property; (b) property assets such as the Chinchilla Property were best held in a 'clean' company rather than an operating company that was heavily involved in the operations of the Business and incurring trading debts and the like; (c) for that reason, although the Chinchilla Property was going to be paid for using Shield Resources' funds, it would be better to put it in the name of Thomas Gem Stone, a company he controlled, in order to protect the Property from what he called 'operational risks'; (d) Thomas Gem Stone would only hold the Chinchilla Property until arrangements were made for a new company in the Shield Group to be established to hold the Chinchilla Property, at which time the Chinchilla Property would be transferred to NewCo; and (e) the shareholdings of NewCo would be in the same proportions as agreed in due course for the whole Shield Group."
5. Thomas denied any such conversation. He said: "I deny the conversation attributed to me [as set out in the preceding paragraph]. The Chinchilla Property was located by a friend of mine, Mr Addy Cheung, in early 2018. I had a conversation with Suzie after that time in which I said words to the effect: 'I have been looking for a property in the Chinchilla area in Queensland to use as a timber handling site. A friend of mine has found one that may be suitable. Can you have a look and let me know what you think?' Suzie visited the site and reported back to me. I then inspected the site and decided to buy it. We never had any conversation about buying the site in the name of a new company or that she would be a shareholder. Suzie started to work in the Shield group of companies and in 2016 had not contributed any funds."

The funds used by Thomas Gem Stone to purchase the Chinchilla Property

1. On 14 September 2018, Thomas Gem Stone entered into a contract with Danma Property Pty Ltd to purchase the Chinchilla Property for $418,000.
2. On 17 September 2018, Shield Resources transferred $19,000 to the account of Thomas Gem Stone to pay for the deposit.
3. On 27 November 2018, Shield Resources transferred a further $416,584.48 to Thomas Gem Stone to pay the balance of the purchase price and related expenses such as stamp duty and solicitors fees.
4. The transaction is recorded in: 1. Shield Resource's bank statements with the description "Wdl Branch Eastwood"; and 2. Thomas Gem Stone's bank statements with the description "Shield Resources Loan".
5. During the hearing, much attention was focused on the descriptor "loan" appearing in Thomas Gem Stone's bank statement.
6. Argument before me proceeded on the basis that this reflected instructions given by Thomas to the relevant bank at the time.
7. Suzie's evidence about this was: "I did not see this bank statement at the time, and was not responsible for the entries set out on the statement in relation to these payments. I did not even have access to the bank account of Shield Resources at the time. That is why I did not know that someone had referred to the $416,584.48 transaction as a 'loan', and if I had known and thought about it at the time, I would not have agreed to give it that description. The discussions I had with Thomas were as I have described above. We never talked about there being a 'loan' for the benefit of Thomas Gem Stone." (Emphasis added.)
8. Mr Elliott and Mr Goodyear submitted: "The fact that Thomas described the transaction in a record in the Thomas Gem Stone bank statement as a loan only demonstrates that he was prepared to act privately with a view to preferring his own interests. It does not reflect the discussion he had with Suzie. It only demonstrates that he was prepared to say and agree one thing with Suzie, but privately take some different position."
9. Later in their submissions, Mr Elliott and Mr Goodyear put the matter more moderately: "The fact that Thomas used the description 'Shield Resources Loan' that now appears in the Thomas Gem Stone bank statements , being a description he arranged at the time, reveals nothing more than an inaccurate description of the effect of the transaction, which is an unsurprising reality given the legal concepts involved and the fact he had no legal training. It does not begin to make the transaction a loan."

The improvements to the Chinchilla Property and the use by Shield Hardwood of the Chinchilla Property

1. Thereafter the Chinchilla Property was redeveloped to make it a suitable site for the operation by Shield Hardwood of its timber export business.
2. Those improvements included construction of permanent buildings and facilities, including a weighbridge, office building, shed, and various associated works. The funds to make those improvements were provided by Shield Resources for a little less than $400,000 and by Shield Hardwood for some $238,000.
3. My attention has not been directed to evidence showing how, if at all, this expenditure by Shield Resources and Shield Hardwood has been reflected in the financial records of those companies and of Thomas Gem Stone.
4. This expenditure has increased the value of the Chinchilla Property but, taking into account the depreciated replacement value of the improvements, by only some $313,800. [51]
5. But Shield Hardwood has had the use of these facilities, and of the Chinchilla Property itself since its acquisition by Thomas Gem Stone, evidently without charge or any formal arrangements.
6. As Mr Kelly and Mr Maroya submitted, the expenditure on these improvements related to the use of the Chinchilla Property for the purpose of carrying on a timber business, and it was Shield Hardwood, not Thomas Gem Stone, that carried on the business, and "in that way, all of the payments in question were for the benefit of [Shield] Hardwood, not Thomas Gem Stone".

The use by the Shield Group of the Chinchilla Property as security for external borrowings

1. The Chinchilla Property has been used as security for borrowings by other members of the Shield Group.
2. Most recently, on 28 August 2023, the Chinchilla Property was offered to Judo Bank as security for a $4.8 million facility it made available to Shield Formply to refinance the obligations undertaken by that company in relation to the purchase of the Nangwarry Property.
3. The Chinchilla Property was valued at $1,270,000 as at 30 October 2023. The Nangwarry Property was valued at $3,100,000 as at 20 September 2023. Whether in these circumstances there is any equity remaining in the Chinchilla Property is a matter which remains to be seen; but seems unlikely.

The proposed incorporation of the Chinchilla Property into the Shield Group in the 2023 restructure negotiations

1. During the course of the 2023 restructure negotiations, a proposal was made in relation to the Chinchilla Property.
2. As I have set out above, [52] Shield Holdings Australia was incorporated on 9 May 2023 with, at that point, a shareholding in the proportions of 50:30:20 for Thomas, Suzie and Robin, reflecting the restructure position as then proposed by Suzie and Robin.
3. On 11 May 2023, Shield Investments QLD Pty Ltd ("Shield Investments QLD") was incorporated as a wholly owned subsidiary of Shield Holdings Australia.
4. On or about 12 July 2023, Thomas, Suzie and Robin executed the documents to which I have referred, [53] having the effect that Thomas, Suzie and Robin hold shares in Shield Holdings Australia, and units in the Shield Holdings Australia Trust in the proportions 64:30:16 respectively.
5. On 19 July 2023, a further company, Shield Assets QLD Pty Ltd ("Shield Assets QLD"), was incorporated as a wholly owned subsidiary of Shield Investments QLD.
6. Those arrangements are reflected in the chart which I have attached to these reasons. [54]
7. At one stage, prior to execution of these documents, the solicitor engaged by Thomas in relation to the restructure, Mr Smith from Goodwin & Co Lawyers, prepared a Subscription Agreement in relation to a further trust into which it was evidently then hoped an external investor, perhaps Vcoco, would subscribe for units with a total value of $5.5 million.
8. The draft Subscription Agreement stated in Sch 2, as amongst the Conditions Precedent to the prospective investor subscribing for units: "5. Establish a unit trust (QLD Trust), with a trustee to be named Shield QLD Investment Pty Ltd (Shield QLD), or such other name as the Issuer determines in its sole discretion. The Issuer will be the sole holder of all units in the QLD Trust and the sole holder of all shares in Shield QLD; 6. All current shareholders of Shield Hardwood Pty Ltd … will transfer ownership of their shares to Shield QLD, to be held on behalf of the QLD Trust; 7. Establish a company to be known as Shield QLD Assets Pty Ltd (Shield Assets), or such other name as the Issuer determines in its sole discretion. Shield QLD will be the sole holder of all shares in Shield Assets; 8. The transfer of ownership of the [Chinchilla Property] from the current registered proprietor to Shield Assets; …" (Emphasis in original.)

Suzie's and Robin's claim

1. In their Amended Summons the Plaintiffs seek: "A declaration that Thomas Gem Stone holds the Chinchilla Property on trust for Shield Resources, either: (a) absolutely; or in the alternative, (b) on the basis that it is held for Shield Resources subject to and pending the: (i) establishment of a new company in accordance with [the Act] that has its ordinary shares held 69.5% by Thomas Gem Stone, 30% by Mana Assets and 0.5% by Awake, and which has its directors Suzie and Thomas (and no other persons) (NewCo); and (ii) transfer of the Chinchilla Property to NewCo."
2. In their Amended Commercial List Statement, the Plaintiffs allege: "The funds [to acquire the Chinchilla Property] were provided by Shield Resources on the basis that Thomas Gem Stone would hold the Chinchilla Property not for itself, but instead on the basis that a new company in the Shield Group would be established with the same shareholdings as Shield Resources (NewCo) to hold the Chinchilla Property as part of a proposed restructuring of the Shield Group, with the Chinchilla Property to be transferred to NewCo upon NewCo's formation (the Underlying Purpose for the provision of funds). Particulars This was discussed and agreed between Suzie and Thomas prior to the purchase of the Chinchilla Property." (Emphasis in original.)
3. And: "Further or in the alternative, Thomas and Thomas Gem Stone are parties to an agreement (Chinchilla Property Arrangement) with Suzie and Shield Resources under which Thomas Gem Stone is obliged to hold the Chinchilla Property for the benefit of Shield Resources pending the establishment of NewCo, and to do all things necessary to facilitate the establishment of NewCo and the transfer of the Chinchilla Property to NewCo." (Emphasis in original.)
4. It is then said to follow that: 1. Thomas Gem Stone holds the Chinchilla Property on an express, resulting, constructive or Quistclose trust [55] for Shield Resources; 2. alternatively, that Thomas and Thomas Gem Stone are obliged to give effect to the "Chinchilla Property Agreement"; 3. alternatively, that Thomas and Thomas Gem Stone represented that they would purchase and hold the Chinchilla Property on the basis earlier pleaded, and it would be unconscionable for Thomas and Thomas Gem Stone to depart from the representation.
5. As developed in closing submissions, the Plaintiffs assert: 1. a resulting trust allegedly arising by reason of the provision by Shield Resources to Thomas of the "funds required to enter into and complete the [Chinchilla Sale Contract]"; or 2. an express trust said to have arisen by reason of the August 2018 conversation to the effect that Thomas Gem Stone would hold the Chinchilla Property "not for itself" but on the basis that NewCo would be established "with the same shareholding as Shield Resources" and that the Chinchilla Property will be transferred to "NewCo" on formation; or 3. a Quistclose trust or constructive trust in favour of Shield Resources arising from the failure of Thomas Gem Stone to transfer the Chinchilla Property to NewCo; or 4. an agreement in 2023 to transfer the Chinchilla Property to Shield Assets QLD as part of the restructure, which was then proposed but later broke down; or 5. a promissory estoppel, or an estoppel by convention, by which Thomas Gem Stone and Thomas are precluded from departing from a representation or convention that Thomas Gem Stone would "purchase and hold the Chinchilla Property on the basis described above".

The trust claims

1. Notwithstanding the prayer in the Amended Summons, the contentions in the Amended Commercial List Statement make clear that the Plaintiffs do not allege that Thomas Gem Stone was to hold the Chinchilla Property on trust for Shield Resources "absolutely".
2. Rather, the allegation is that the agreement was that Thomas Gem Stone was to hold the Chinchilla Property on trust for NewCo, with NewCo to have the same shareholding as Shield Resources "to hold the Chinchilla Property as part of a proposed restructuring".
3. The shareholding posited in the Amended Summons for NewCo is 69.5% to Thomas Gem Stone, 30% to Mana Assets and 0.5% to Awake. This has been the shareholding of Shield Resources since Suzie's shareholding, through Mana Assets, was increased from 6% to 30% in 2022. [56]
4. But this is not what Suzie says was agreed in the August 2018 conversation, which was that "the shareholdings of NewCo would be in the same proportions as agreed in due course for the whole Shield Group"; not as they were agreed in 2022 to be for Shield Resources itself.
5. In their written submissions, Mr Elliott and Mr Goodyear expressed the matter using the same language as Suzie had stated.
6. But in closing oral submissions, Mr Elliott put the matter as it is stated in the Amended Commercial List Statement. Thus, Mr Elliott submitted: "… the agreement that we say was formed between Suzie in discussions between Suzie and Thomas was to the effect that money would come from Shield Resources on the basis that a new company would be set up in due course, having the same shareholdings as Shield Resources, and the property transferred to it … I accept that the agreement that we sue on is an agreement under which the shareholding of the new co was to be identical to Shield Resources, and because Shield has its Queensland shareholding is different, I can't nominate Shield Assets [QLD] as new co. So we say there's an agreement to be performed by Thomas Gem Stone and Shield Resources under which a new company is to be established and the property transferred to it, and we seek orders for the performance of that agreement." (Emphasis added.)
7. A short answer to this case is that Suzie's evidence does not prove it.
8. Her evidence was that Thomas said the shareholding in NewCo was to be "in the same proportion as agreed in due course for the whole Shield Group", not the same shareholdings as Shield Resources "as part of a proposed restructuring of the Shield Group". [57]

No express trust, Quistclose trust, estoppel or Chinchilla Property Arrangement

1. The Plaintiffs' case for an express trust, a Quistclose trust, an estoppel and the alleged Chinchilla Property Arrangement depended on my acceptance of Suzie's evidence concerning the August 2018 conversation.
2. As I do not accept such a conversation took place, those claims must fail.

No resulting trust

1. The Plaintiffs' case for a resulting trust depended on establishing that Shield Resources paid for the Chinchilla Property.
2. For the reasons I have set out above, this has not been established. Thomas Gem Stone borrowed the purchase price from Shield Resources in September and November 2018 and repaid that borrowing in August 2019.

A constructive trust?

1. The Plaintiffs' alternative case was for a constructive trust.
2. In their written submissions, Mr Elliott and Mr Goodyear put the argument this way: "There is a further and separate way in which a constructive trust arises, even if there was no conversation of the kind Suzie described in her evidence. On that scenario, Thomas (using the vehicle of Thomas Gem Stone) would have taken for himself an opportunity available for Shield Resources, and preferred his own interests to those of Shield Resources."
3. It is however by no means clear to me that the acquisition of the Chinchilla Property was an opportunity that should be seen as being available for Shield Resources in the relevant sense.
4. On Suzie's own account of the August 2018 conversation, Suzie agreed that Thomas Gem Stone should own the property to protect it from "operational risks". And Thomas Gem Stone's acquisition of the Chinchilla Property allowed Shield Hardwood to use it for its own purposes and without charge.
5. In any event, the only other shareholder in Shield Resources, Mana Assets, and its only other director, Suzie, agreed that Thomas Gem Stone was to acquire the Chinchilla Property.
6. Although I have not accepted Suzie's account of the August 2018 conversation, there is no suggestion in the evidence that she did not know of and agree to Thomas Gem Stone acquiring the property and using the resources of Shield Resources to do so; nor that she did not understand to what use Thomas Gem Stone would put the property.

Oppression?

1. Apart from the above matters, the only allegation of oppression made by Suzie and Robin concerning the Chinchilla Property is Thomas's alleged use of the funds of Shield Resources and Shield Hardwood to fund the improvements to the Chinchilla Property.
2. As I have said, my attention has not been directed to any evidence showing if or how those companies have accounted for the funds used to effect those improvements.
3. Suzie was, at the time, a director of and, through Mana Assets and Phoenix Group Australia, a shareholder in each of Shield Resources and Shield Hardwood. She knew that Thomas was causing the funds of those two companies to be used to fund the improvements to the Chinchilla Property.
4. Her evidence was that: "This occurred with my knowledge … I stood by whilst the Chinchilla Property Improvements were paid for by Shield Resources and Shield Hardwood because I understood that the Chinchilla Property was really part of the Shield Group (and was going to be moved back to a Shield Group entity) and that the Chinchilla Property was not the private property of Thomas Gem Stone."
5. As I have not accepted Suzie's account of the 27 August 2018 conversation, I do not accept that the understanding to which she deposed was based on any such conversation.
6. The fact is that she knew of and agreed to the use of Shield Resources' and Shield Hardwood's funds to improve the Chinchilla Property. The result has not been shown to be so commercially unfair to amount to oppression.
7. Even if I were persuaded that, despite these matters, the circumstances constituted oppressive conduct by Thomas in relation to either Shield Resources or Shield Hardwood, I cannot see how that could compel a conclusion that Thomas Gem Stone transfer the Chinchilla Property to Shield Resources.
8. As Mr Kelly and Mr Maroya submitted, at the most what might be called for is an account by Thomas Gem Stone to Shield Resources and Shield Hardwood for such benefit as Thomas Gem Stone may have gained by reason of this expenditure. Any such account would have to take into account the benefit that Shield Hardwood has had from its use of those facilities and of the property generally.
9. In any event, this is not the relief sought.

Standing

1. For completeness, I will deal with the submission made by Mr Kelly and Mr Maroya that the Plaintiffs had no standing to bring the claim concerning the Chinchilla Property because the claims were for the benefit of Shield Resources and NewCo, and that the Plaintiffs have not sought or obtained leave under s 237 of the Act to bring a derivative claim.
2. In response, Mr Elliott and Mr Goodyear pointed to authorities to the effect that the court's powers under s 233 of the Act are wide enough to vindicate a company's punitive claim.
3. Thus in Lukaszewicz v Polish Club Ltd, [59] Black J said: [60] "I proceed on the basis that the applicant in an oppression claim can bring a claim for breach of general law and statutory duties owed to a company, without necessarily seeking a separate order for leave to bring a statutory derivative action under s 237 of [the Act], although such a claim could only extend to loss which the company had suffered and not loss that the shareholder had suffered personally." [61]
4. In view of the conclusions to which I have come, this point does not arise.

Conclusion as to the Chinchilla Property

1. The Plaintiffs' claims in relation to the Chinchilla Property fail.

Alleged oppression - alleged serious mismanagement of the sawmill construction

The pleaded case

1. The Plaintiffs make the following allegations on this subject in their Amended Commercial List Statement: "[U]nbeknownst to Suzie and Robin at the time [when Thomas insisted on retaining a majority share], the one job that Thomas was undertaking and which he said he was the only one qualified to undertake, namely the management of the construction of the sawmill factory and facilities at the Nangwarry Property, was being grossly mismanaged by Thomas, and in a way that would subsequently necessitate the closure of the site, the issue of prohibition orders by government agencies, substantial and costly remediation works and consequential delays in the progress of the business … … Thomas assumed complete control of the management of the construction activities at the Nangwarry Property on the basis of statements that he was the only one who had the skills to do so, when in fact he did not have the skills that were required, and then mismanaged that project in the manner described above, with the consequences there stated."

What happened

1. Thomas said that the purpose of setting up Shield Holdings South Australia was to set up a timber milling and manufacturing facility in South Australia similar to the one that he had set up in China. He said that he designed and ordered the plant and equipment and supervised the installation and testing of the production line, and that by early October 2023, the production line was mostly assembled and had been successfully tested.
2. Thomas said that, on 5 October 2023, he met with Suzie and Robin. He said the meeting was tense and that Suzie said words to the effect, "Have you changed your mind? Can we go ahead with the restructure?" Thomas said that he replied, "No, I do not want to go ahead. I started these companies and I am not going to be pushed out of management."
3. Thomas said that he and Suzie have not had a polite conversation with each other about any of the affairs of the Shield Group companies since that occasion.
4. What Thomas apparently did not know was that between 28 September 2023 and 3 October 2023, Kevin, ostensibly in his capacity as "WHS Officer" of Shield Holdings South Australia, had conducted an "inspection" of the site at the Nangwarry Property.
5. Kevin produced a "Nangwarry WHS Initial Report" on 4 October 2023. That document contained, under the heading "Executive Summary": "As the company WHS officer … I first visited Nangwarry from 28th September to 3rd October 2023. My purpose was to prepare the site for EXPORT DAFF Audit on 11 October and conduct a preliminary site inspection for WHS on the works being undertaken since February 2023. For those unfamiliar with my background, I am also a former Officer in the Royal Australian Engineers (RAE), a military officer operating within 35 Field Squadron of Engineers located in Mount Isa Queensland, attached to the 11 Brigade, Operational Defence Force (OBD) at Townsville. I speak with some expertise with the comments I am about to make in this report. My executive summary from my initial WHS inspections is that the SHIELD Nangwarry site is 100% 'Tofu Dregs' [62] construction. The workmanship is beyond words for negligent disregard for safety civil construction standards. This is placing our project at serious risks of catastrophic failures. My report provides photographic evidence of poorly executed site build that breaches Australian Standards and WHS Codes of Practices. This is likely to be re-affirmed by Tonkins Engineering inspections shortly. SHIELD is breaching WHS Codes of Practise [sic] at Nangwarry and is now at risk of being shut down by Safe Work SA should they inspect our facility. This is how serious this is. Our project at Nangwarry needs to be halted immediately and a professional leadership skillset engaged to take over. This project is beyond the skillset of MD Thomas Feng YE, and this report is evidence of that. Unless a change in skillsets is made, this project is doomed to a short life and all Shareholders will loose [sic] significantly. The risk of legal litigation with all Directors is real." (Emphasis in original.)

Thomas locked out of the Nangwarry Property

1. On 10 November 2023, Suzie conducted a "site visit" of the Nangwarry Property. She concluded that Thomas had not taken steps to remedy the concerns identified in Kevin's 4 October 2023 report.
2. On 13 November 2023, Suzie closed the Nangwarry Property to Thomas and his workers and called in the local police to remove those workers and to shut them out of the site.
3. Suzie sent an email to staff that she allowed to remain onsite at the Nangwarry Property, and to staff at the Bordertown and Chinchilla facilities, stating "Thomas Ye or his associates are not allowed to enter any company facilities".
4. Thomas remains locked out of the Nangwarry Property and has, in effect, been excluded from the management of the Shield Group.
5. As of today, Suzie continues to run Shield Hardwood's hardwood log export business and Shield Resources' softwood export business.

Events in early 2024

1. On 11 January 2024 Kevin, writing as Chief Operating Officer and WHS Officer of Shield Holdings South Australia, wrote to SafeWork SA lodging a "complaint" against Thomas.
2. Under the heading "Summary", Kevin concluded: "SHIELD has invested significant capital into their Nangwarry site. Capital that was invested after Feng YE (Thomas) persuaded the Board over several years that he had the expertise and knowledge to build and operate sawmill facilities. The evidence uncovered in September 2023 during the Initial WHS Audit dated 4 October 2023 and Supplementary WHS Audit dated 19 Dec 2023, proved that Thomas Feng YE did not have the claimed expertise or knowledge but has now also placed the SHIELD company at serious risks due to the reckless conduct of his workmanship. Resulting in a 12-month setback of commencing operations and a significant loss of capital funding resulting from his reckless conduct and damages. SHIELD shareholders are pursuing other legal actions against Feng YE (Thomas) through the Federal Court under [the Act], resulting from his claims. In the interim, the shareholders also need to have Feng Ye (Thomas) prosecuted by Safe Work S.A. for the serious matters being presented. People's lives are at risk and the site is now closed until qualified electrical and civil engineers are engaged to remedy the works so SHIELD can enter production in a manner that meets Safe Work S.A. and SHIELD's safety standards. We seek and look forward to your support." (Emphasis added.)
3. Thus, in the context of what Kevin stated were soon to be commenced proceedings in the Federal Court, he asserted that the "shareholders", obviously Suzie and Robin, "need[ed] to have [Thomas] prosecuted".
4. Kevin gave this evidence about that matter: "Q. You're aware that the Federal Court proceedings were commenced on 15 January 2024, some five days after this letter? Yes? A. Yes. Q. In the letter you say, 'In the interim, the shareholders also need to have Feng Ye prosecuted by SafeWork South Australia.' On what basis do you say that the shareholders need to have Mr Ye prosecuted? A. On the basis that there's been reckless conduct. There's - on the basis that lives are at risk. On the basis that, in addition to whatever court proceedings were being managed by the CEO, my responsibility laid in the regulatory requirements of the company, and to have SafeWork South Australia investigate what had happened and do their business as a regulatory body, to investigate the damages. Now, remembering that SafeWork did go there and they and seven prohibition letters were issued as a result of their findings from this letter. So, Mr Kelly, I put it to you that my actions saved lives, that I saved lives. What I've uncovered has saved lives -- Q. You're deluding yourself, sir. You are deluding yourself? A. Well, let's just look at what's happened, right? People's lives have been saved. My job as a work health safety officer - chief operations officer is to protect our people and assets. What I uncovered in my 4 October report were findings that were going to cause death to workers. It wasn't a matter of -- HIS HONOUR Q. But by 10 January, Thomas was locked out of the site, wasn't he? A. I'm talking October. He was locked out on 13 November, your Honour. Q. You're being asked questions about a letter you wrote to SafeWork South Australia on 10 January. By then, Thomas had been locked out, hadn't he, for months? A. So, your Honour, my report was conducted -- Q. Is that right? A. -- on 4th - sorry? Q. He'd been locked out since mid-November? A. Correct. But my report was done on 4 October."

Was there mismanagement?

1. Mr Kelly and Mr Maroya accepted that: "… the company failed to obtain all necessary local government approvals when it came to providing accommodation for workers on site and that the quality of onsite accommodation for overseas workers was not up to local standards."
2. I think Mr Kelly and Mr Maroya understated matters somewhat when they submitted: "At its highest, the hypothetical bystander may see Thomas as having imported some work practices from the People's Republic of China and applied those practices in rural South Australia with qualified success. Cultural and legal problems were incurred in relation to some of the work that was done - such as the installation of non-conforming Chinese style toilet facilities, and the use of electricians who are not licensed in [South Australia]." (Emphasis added.)
3. But the tone adopted by Kevin in his 4 October 2023 report, and in his subsequent acrimonious email exchange with Thomas, suggests that he was highly motivated to paint Thomas's activities in relation to the Nangwarry Property in the worst possible light.
4. I think it unlikely to be a coincidence that Kevin's initial inspection of the site took place between 28 September 2023 and 3 October 2023, at precisely the same time as the ultimate disintegration of the relations between his wife Suzie, and Thomas.
5. As Mr Kelly and Mr Maroya pointed out, Suzie did not feel the need to cause the site conditions at the Nangwarry Property to be investigated prior to the end of September 2023, by which time her relationship with Thomas had broken down.
6. Suzie's evidence was that she first became concerned about the Nangwarry site conditions at the Nangwarry Property when she heard of complaints that workers from China were living on the site. Suzie assisted the workers in question in coming to Australia by facilitating their visa applications. Suzie was familiar with the site and responsible for obtaining the necessary approvals. She was also one of the two directors of Shield Holdings South Australia and, as Mr Kelly and Mr Maroya have submitted, was no less responsible for managerial oversight of the business and affairs of Shield Holdings South Australia than was Thomas.

Oppressive conduct by Thomas?

1. Poor management in and of itself is not a ground for the statutory oppression remedy. [63]
2. Mr Elliott and Mr Goodyear submitted that mismanagement "may form part of a broader case, as it does here," because: "Thomas' conduct at the Nangwarry Property was also contrary to the interests of members of Shield Holdings South Australia (as owner of the Nangwarry Property) as a whole, and of members of Shield Resources (as operator of the softwood log export business that uses in part the Nangwarry Property) as a whole. That is because his conduct put those companies in trouble with the regulators and at risk of suffering serious reputational damage and, potentially, of litigation should any safety issues result in serious injury or death."
3. I do not accept that submission. Thomas may well have been guilty of poor management oversight at the Nangwarry Property, but I cannot see how this could constitute conduct of the affairs of the relevant company, Shield Holdings South Australia.
4. In any event, Thomas's conduct in relation to the management of the Nangwarry Property needs to be seen in the context of Suzie's decision to lock him out of the site on 15 November 2023 and thereafter exclude him from all management roles in the Shield Group.

Oppressive conduct by Suzie, Robin and Kevin?

1. It is common ground that wrongful exclusion from management may be a form of oppression. [64]
2. As I have said above, [65] on 13 November 2023 Suzie wrote to the staff at the Nangwarry, Chinchilla and Bordertown facilities. Suzie wrote: "Dear All, I would like to inform you that I am currently having dispute with Thomas Ye (Feng Ye). Thomas has breached the shareholder agreement and breached his duty as Director of Shield business. In order to protect Shield's interests, I have to take actions against him. The business operation will continue as normal. But Thomas Ye or his associates are not allowed to enter any company facilities including Bordertown Intermodal Terminal, Chinchilla Hardwood Export Facility and Nangwarry Timber Processing and Export Facility. It is unfortunate that Thomas could not honour his commitment and would not act as director under Australian law. As shareholder and director of Shield business, I do have obligations to stop his destructive behaviour and protect our assets and employees. I will send further notice if things are changing. Regards, Suzie Li Chief Executive Officer."
3. Thereafter, Suzie and Robin have been conducting the business and affairs of Shield Holdings South Australia, and indeed all the other companies in the Shield Group.
4. There is no controversy about this. Thus, in their opening written submissions Mr Elliott and Mr Goodyear said: "… the practical reality is that Suzie, Robin and Kevin have, together, been conducting the operations of the business of the Shield Group, and providing it with the financial support and directorship that it requires."
5. Since Thomas was locked out of the Nangwarry Property, there has not been any meeting of directors of any other company in the Shield Group.
6. In those circumstances, I see substance in the submissions by Mr Kelly and Mr Maroya: "The plaintiffs have not established any oppression of Mana Assets by Thomas or Thomas Gem Stone in relation to Shield Holdings South Australia. The boot is on the other foot. The evidence establishes that Suzie and Mana Assets have conducted the business and affairs of the company in a manner that is oppressive to Thomas Gem Stone by locking Thomas out of the Nangwarry site on 14 November 2023 and thereafter excluding him from participation in the business and affairs of the company, including the conduct and funding of the works on that site."

Alleged oppression - attempts to remove or diminish Suzie

1. Suzie and Robin contend that Thomas has sought to diminish their roles in the Shield Group by: 1. causing Thomas Gem Stone to exercise its 64% majority voting rights at the meeting of shareholders of Shield Holdings Australia of 12 September 2023, to which I have referred, to cause his wife and two family members to be appointed directors of Shield Holdings Australia; 2. to convene the board meeting of Shield Holdings Australia on 29 September 2023 that Suzie be removed as Chief Executive Officer and that he be appointed in her place; and 3. to call proposed shareholders meetings of Shield Holdings South Australia on 13 November 2023, 15 December 2023 and 21 March 2024 to consider a proposal that Suzie be removed as director of that company; none of the meetings proceeded.
2. As I have said, there was no dispute before me that exclusion of a member from management might constitute commercially unfair conduct amounting to oppression.

The 12 September 2023 meeting

1. I have set out the circumstances of the 12 September 2023 meeting above.
2. Suzie's evidence concerning this meeting was: "On 12 September 2023, I attended the Shield Holdings Australia meeting in person, and voted against the appointment … of Thomas' sister-in-law (Lili Guan) and niece (Waner Zhangguan). Over my objection, they were voted in as directors, as recorded in the minutes of meeting from that day … I asked what qualifications or expertise the proposed new directors would be bringing, but Thomas just said they were being appointed and there was nothing I could do about it."
3. The meeting minutes to which Suzie referred were in the following terms and suggest that, at the time, the debate was as to whether the proposed additional directors had "proven timber industry experience and skills": Director Nominee Feng YE Xuxu LI Xiaosi Chaney QIAN MEMO Result Ying Guan YES YES NO [Robin] did not approve Ying GUAN, because she is short of proven timber industry experience and skills. 84% vote YES passed Lili Guan YES NO NO [Suzie] did not approve Lili GUAN because did not know any his/her background information, and even do not know him/her. 64% vote YES passed [Robin] did not approve Lili GUAN, because she is short of proven timber industry experience and skills. Waner Zhangguan YES NO NO [Suzie] did not approve Waner Zhangguan because did not know any his/her background information, and even do not know him/her/ 64% vote YES passed [Robin] did not approve Waner Zhangguan, because she is short of proven timber industry experience and skills.

1. The complaint is put more widely in the Plaintiffs' Amended Commercial List Statement as follows: "The proposed new directors, and each of them, did not have the qualifications, skills or experience to be a director of Shield Holdings Australia. Further, the new directors were appointed by Thomas in order to obtain effective complete control of the management of Shield Holdings Australia, and through it, its subsidiaries, and to effectively render Suzie's and Robin's directorships of the company nugatory. By so acting, Thomas was departing from what had been agreed between the shareholders (through discussion between Thomas, Suzie and Robin) at the time of the establishment of Shield Holdings Australia, namely that as a result of their respective shareholdings and the financial assistance and labours that they had provided either directly or through Suzie and Robin, the affairs of the company and its subsidiaries would be directed by a board of Shield Holdings Australia comprising an appointee of each shareholder (being Thomas, Suzie and Robin)."
2. In relation to the question of the qualifications of the new directors, Mr Kelly and Mr Maroya submitted: "There is no such thing as a necessary qualification, skill or type of experience that a person must have before he or she is appointed as a director of Holdings; nor was any such thing put to Thomas in cross-examination, or proven not to have existed in each of the persons concerned; nor would the Court countenance the making of an order that they or any of them be removed as a director without them having been joined as a party to the proceedings."
3. However that may be, it does seem obvious that Thomas's intention was to cause family members to be appointed to the board of Shield Holdings Australia so that, with Thomas, they could out-vote Suzie and Robin.
4. That was conduct which is capable of being oppressive to Suzie and Robin.
5. The Plaintiffs seek an order rescinding the 12 September 2023 resolution. There is no dispute that the Court has the power to do this. [66]
6. Were the events of 12 September 2023 to be viewed in isolation, a basis may be seen to exist to make such an order.
7. But the relevant context here is that the relationship between the parties was unravelling, as events I have outlined make clear, and whether an order should be made to rescind this particular resolution must be seen in that wider context.

The 29 September 2023 meeting

1. I have set out the circumstances of this meeting above.
2. No resolution was passed, and the Plaintiffs seek no relief in relation to this meeting.

The proposed resolutions to remove Suzie as a director of Shield Holdings South Australia

1. By the time Thomas gave the notices to convene the shareholders meetings of Shield Holdings South Australia on 13 November 2023, 15 December 2023 and 21 March 2024, the relationship between the parties had come to an end.
2. Thomas explained his position as follows: "The view I took was that the relationship between Suzie and myself, and through each of us, our shareholding entities (Thomas Gem Stone and Mana Assets) had broken-down to a point at which there is no way we could work together as directors of SHSA and it was in the best interests of SHSA for one of us to go. As I saw it, I was the majority shareholder and it was my responsibility to put a functioning board of directors in place, otherwise the business and affairs of the company, including the installation and commissioning of the production line and other facilities at Nangwarry, would be paralysed."
3. Further, as Mr Kelly and Mr Maroya submitted, the position had deteriorated by 21 March 2024: "[T]he relationship between Suzie and Thomas had irretrievably broken down. Thomas had not only been locked out of the Nangwarry site since 14 November 2023 but Suzie and her husband had done their level best to have Thomas prosecuted by Safe Work SA. They also commenced the Federal Court Proceedings against him, in which they made serious allegations of misleading and deceptive conduct and sought, amongst other things, an order that Suzie have 95% of the share capital of Shield Holdings South Australia for nil consideration and Awake the other 5%, shutting him out of the company completely. Suzie and Thomas were no longer on speaking terms. With the breakdown of the relationship. Shield Holdings South Australia was left without a functioning board of directors."
4. None of the meetings that Thomas sought to convene came to pass. Thomas's attempts to convene the meetings came at a time when the relationship between the parties had unravelled. I do not see them as adding anything to the Plaintiffs' case.

Alleged oppression - "misappropriation" of funds

1. In their closing written submissions, Mr Elliott and Mr Goodyear used the heading "misappropriation of funds" in relation to this alleged species of oppression and submitted: "The misappropriation of funds, or at the very least the unequal and unwarranted diversion of company funds into one's own pocket, is commercially unfair and oppressive: see, e.g., Cowling v Mekken; [67] BAM Property Group Pty Ltd as trustee for BAM Property Group Pty Ltd v Imoda Group Holdings Pty Ltd. [68] "
2. However, in closing oral submissions, Mr Elliott said: "The next species of misconduct is the, we have called it, perhaps, inappropriately in our written submissions misappropriation of funds. It's, perhaps, better described in the text of our submissions as the taking of funds from the business in a way that resulted in an unfair and unequal distribution and that's the language that we press as it appears in para 218 of our written submissions. We don't need to put it as high as misappropriation and if your Honour has para 218, the submissions there, we are content to proceed on the basis that the submission is put by reference to an unequal and unwarranted diversion of the company's funds into Thomas' pocket."
3. The Plaintiffs point to withdrawals from the bank accounts of a number of the Shield Group companies and, in their Amended Commercial List Statement assert, without particularisation, that all of these funds were withdrawn by Thomas from those accounts "for his benefit".
4. The basis upon which these allegations were made appears to be no more than that Suzie did not authorise the payments.

Overdrawing Shield Resources' running account

1. In relation to Shield Resources, the Plaintiffs allege that Thomas advanced identified sums to Shield Resources and made identified withdrawals, all said to be "for his benefit", the Plaintiffs seek an order that Thomas "repay" the difference.
2. The cross-examination of Thomas focused on the largest of withdrawals, namely an amount of $370,030 made from the Shield Resources account on 22 March 2018.
3. Mr Elliott's cross-examination of Thomas about this was as follows: "Q. Do you see further down the page on 22 March, there's a withdrawal from a branch at Eastwood? That's a branch that you would go to? A. INTERPRETER: Should be. Q. You withdrew $370,030? A. INTERPRETER: Yes, that's what I did transfer. Q. What did you do with that money? A. INTERPRETER: I have another statement to show that is the payment I paid to overseas business partner. His name is Liang Jie Chen. Q. A business partner of yours? A. INTERPRETER: That's the company's business partner. Q. What partnership existed? A. INTERPRETER: This is just the normal business practice between us. It is between Liang Jie Chen and I. I have the evidence to prove that a business partnership. I have the statement as well. Q. I'm not asking for documents. I want the witness to describe the nature of the partnership that existed with this person? A. INTERPRETER: Mr Ye is asking, which year is it related? Q. 2018. A. INTERPRETER: So, because it happened a long time ago, I can't remember which project it is related, but in my company's [ledger], [69] I can find the transfer of the money and there's a note on it."
4. Mr Elliott and Mr Goodyear describe this explanation as "unsatisfactory". It is true that Thomas was not able to give a detailed account of this withdrawal. However, I am not prepared to draw the inference that the funds were misapplied as was implicitly suggested in Mr Elliott's and Mr Goodyear's submissions.
5. Further, as Mr Kelly and Mr Maroya pointed out, the figures in the tables in the Plaintiffs' Amended Commercial List Statement setting out the relevant deposits and withdrawals from the Shield Resources account are inconsistent with a document that Robin prepared on 25 September 2023 called "Thomas Loan Summary". In that document, different figures are shown as having been advanced and withdrawn by Thomas and a "debit balance" of $120,819.31 is shown; compared to the "debit balance" of $440,596 alleged in the Amended Commercial List Statement. It is not possible to reconcile the two because Robin's document does not contain dates and details of individual entries.

"Various ad-hoc withdrawals"

1. In their closing written submissions, Mr Elliott and Mr Goodyear submitted that Suzie had identified a number of transactions from various Shield Group accounts that occurred in October and November 2023, being "the period during which the relationship with Thomas imploded", which Suzie did not authorise.
2. In his affidavit, Thomas admitted the withdrawals but said that "each of the said payments was for business purposes and within my authority, as Managing Director, to make".
3. Mr Elliott and Mr Goodyear submitted: "That is unpersuasive, given the lack of any detail one might expect to be given if there were any truth to the matter."
4. Mr Elliott and Mr Goodyear continued: "The lack of force in Thomas's contention as to the purposes of the expenditure is perhaps best displayed by the fact that he also alleges that if the transactions were not otherwise authorised, the [Commercial List Response] filed by him itself apparently 'ratifies the authority of Thomas to make the said payments'."
5. Mr Elliott and Mr Goodyear were referring to this passage in Thomas's Commercial List Response: "Further and in the alternative, to any extent that may be necessary, Shield Resources, Shield Formply, Shield Equipment Qld, [70] Shield Holdings South Australia and Shield Timber SA hereby ratifies the authority of Thomas to make the said payments."
6. I have not been invited to make any finding about the effect of this purported ratification.
7. The point for present purposes is that what I have set out above comprises the totality of the submissions made on behalf of the Plaintiffs in relation to what was initially described as Thomas's "misappropriation" of funds.
8. I am not prepared to make any such finding based on those submissions. In particular, the mere fact that the withdrawals were made in October and November 2023 is not a sufficient basis for me to make such a finding.
9. I turn to the particular withdrawals complained of.

Withdrawals from account of Shield Resources

1. The Plaintiffs allege two unauthorised withdrawals from the Shield Resources account.
2. The first is the withdrawal of $132,000 made on 2 October 2023. The transaction description on the relevant bank account is "Shield Formply Australia ply".
3. Mr Elliott put to Thomas in cross-examination that the purpose of this transfer was to allow Shield Formply to make monthly payments to Judo Bank. Judo Bank had advanced funds in relation to the Nangwarry Property.
4. The cross-examination was: "Q. Yes. Earlier on in 2023 you transferred $132,000 from Shield Resources to Shield Formply. Correct? A. INTERPRETER: Please give me the exact date of that transfer. Q. Do you remember doing that or not, in 2023? A. INTERPRETER: I'm not a computer, I can't. Q. Does that mean you don't remember transferring $132,000 from Shield Resources to Shield Formply late last year? A. INTERPRETER: If I did that transfer that should have been reflected in the bank statement. Q. So you don't remember? A. INTERPRETER: That's correct. Q. Can I just show you this document. Do you see here, Mr Ye, a bank statement for Shield Formply with Westpac for September, October 2023. You can see on 2 October a sum of $132,000 coming into Shield Formply from Shield Resources. A. INTERPRETER: Yes. I did that."
5. As Mr Kelly and Mr Maroya submitted: "It was not put to Thomas that the purpose of the transfer was in any way improper, still less that he intended to take the $132,000 for himself or for the benefit of others and thereby misappropriated the $132,000; it was a straight-forward inter-company loan transaction which involved no element of commercial unfairness ..."
6. I accept that submission.
7. The second allegedly unauthorised withdrawal was one made on 28 November 2023 for $10,000 with the transaction description on the relevant bank account "Shield Timber SA Pty Ltd".
8. Thomas was not cross-examined about this transaction. Self-evidently, the payment was for the benefit of Shield Timber SA.

Withdrawals from account of Shield Equipment Qld

1. The plaintiffs allege two unauthorised withdrawals by Thomas from the Shield Equipment Qld account.
2. They are withdrawals on 13 and 18 November 2023 for $1,200 and $750. Both withdrawals have the transaction description on the relevant bank account "Shield Tim[b]er SA".
3. These entries appear to record a transfer of funds from the account of Shield Equipment Qld to the account of Shield Timber SA.
4. No doubt Shield Equipment Qld is entitled to a credit for the sum, $1,950, on its intercompany account with Shield Timber SA.
5. However, I see no basis to conclude that Thomas has misappropriated these funds.

Withdrawals from account of Shield Timber SA

1. The Plaintiffs allege two unauthorised withdrawals from this account.
2. The first is a withdrawal on 20 November 2023 for $1,300 with the transaction description on the relevant bank account as "Pymt Shield For". This is evidently an intercompany loan by Shield Timber SA to Shield Formply.
3. The second withdrawal is on 28 November 2023 for $10,000 with the description in the relevant bank account "Feng Ye Ye claim nangwarry Ye claim nangwarry". Shield Timber SA is the manager of the sawmill business at the Nangwarry Property. This withdrawal was made after Thomas had been locked out of the Nangwarry Property but appears to be a notation of payment of a claim for expenses related to the Nangwarry Property.
4. Thomas was not asked any questions about this in cross-examination. In those circumstances, I cannot see how I can conclude that this is an inappropriate diversion of Shield Timber SA's funds.
5. The balance of the Plaintiffs' claims in relation to Shield Timber SA relate to debit card transactions totalling $1,536 that Suzie has listed in a paragraph in her affidavit. Mr Elliott and Mr Goodyear directed no submissions to these amounts and I do not propose to make any findings about them.

Withdrawal from account of Shield Holdings South Australia

1. The cheque in question here was for the princely sum of $100 and drawn on 20 November 2023 with the transaction description in the relevant bank account "Shield Formply Australia Pty Ltd 18 Nov 2023".
2. The entry appears to comprise a payment from Shield Holdings South Australia to Shield Formply; that is, in effect, an intercompany loan.
3. Mr Elliott and Mr Goodyear did not suggest otherwise in their written submissions.
4. The fact that the Plaintiffs sought recovery from Thomas of $100 in the context of litigation of this magnitude suggests that there has been a loss of perspective on Suzie's and Robin's part.

Withdrawal from account of Shield Formply

1. Suzie deposed that: "Robin said that he had seen that Thomas appeared to have transferred a sum of over $100,000 from Shield Resources to Shield Formply, but since that transfer, Thomas appeared to have transferred significant amounts of that out of Shield Formply for Thomas's personal use …"
2. Suzie said that Robin said the result was that "there was not much left to cover ongoing mortgage payments to Judo Bank". I return to Judo Bank below. [71]
3. Four particular cheques are identified as being unauthorised withdrawals made by Thomas from Shield Formply for his own benefit.
4. The first cheque was drawn on 18 November 2023 for $200,000 with the description "Return loan".
5. There are three credit entries in the same bank statement for $25,000, $75,000 and $100,000, recording that a total of $200,000 was advanced to Shield Formply by a company called Dora Investments Pty Ltd between 11 November 2023 and 17 November 2023.
6. Thomas gave this evidence about that matter: "Q. Staying with page 147, you can see there are a number of credit entries between 11 November and 17 November? A. INTERPRETER: Yes. Q. And deposits made by Dora Investment? A. INTERPRETER: Yes. Q. And who is that - who or what is that, Dora Investment? A. INTERPRETER: That money was transferred from my friend. It's a short term loan by a few times, because at the beginning, in order to repay the loan from [Judo] Bank, I asked my friend to lend me $200,000, and later I found we had fund to repay that loan, so I returned the money back to my friend. Q. Didn't you take $200,000 out of this account on 18 November? A. INTERPRETER: Yes. That's the amount my friend injected to us, but later we didn't use that fund. That's why I returned that fund to my friend."
7. This evidence shows that Dora Investments made a short term loan to Shield Formply that Thomas caused to be repaid by the cheque in question.
8. The second cheque was drawn on 25 November 2023 for $10,000 with the description in the bank statement "Transfer To Feng Ye Ye Claiming".
9. Mr Kelly and Mr Maroya submitted that the entry in the bank statement showed that this was a claim by Thomas for refund of expenses incurred by him on behalf of the company.
10. There is no direct evidence to support that submission. However, the bank entry shows that Thomas made no attempt to disguise the nature of the payment. Further, there is a similar entry for $37,989.57 in the same bank account for 13 December 2023 using the words "Transfer To Feng Ye ye claim nangwarry" about which no complaint is made.

Conclusion in relation to the "misappropriation" claim

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

Alleged oppression - refusing to pay Judo Bank loan

1. As I have set out above, Shield Formply borrowed $4.8 million from Judo Bank to finance the South Australian softwood timber export business being conducted by Shield Timber SA on the Nangwarry Property, which is owned by Shield Holdings South Australia.
2. In their closing submissions, Mr Elliott and Mr Goodyear said: "In exercising his 70% control of Shield Formply, Thomas has had that company refuse to make the monthly payments due under the Judo Bank Loan Agreement … putting Shield Formply at risk of default."
3. As I have said, Suzie has given personal guarantees and a mortgage over her properties to secure the Judo Bank loan.
4. Mr Elliott and Mr Goodyear continued: "Thus, Thomas' approach of letting Shield Formply ignore its repayment obligations has forced Suzie to step in to cover the Judo Bank Loan Agreement payments, which she has done in an attempt to prevent Judo Bank enforcing securities against her. To avoid that risk, Suzie has (via Mana Assets) paid Shield Formply's monthly repayments (of $47,036) to Judo Bank … The above conduct has seen the affairs of Shield Formply conducted in a manner that is contrary to the interests of Shield Formply's members as a whole, because Shield Formply is being put at risk of defaulting on the Judo Bank Loan Agreement, and it is also oppressive to Suzie and Robin, both in their capacities as members of Shield Formply, but also in their capacities as providers of security under the Judo Bank Loan Agreement ... Accordingly, an order is sought pursuant to [the Act] s 233 that Shield Formply restore the amounts that have been paid by Mana Assets to cover the Judo Bank Loan Agreement payments, namely the $235,180.05 paid."
5. The difficulty I see with this submission is that my attention has not been directed to any evidence to show that Thomas has "refused" to cause Shield Formply to make the relevant monthly payments.
6. Indeed, my attention was not drawn to any evidence showing in what circumstances Shield Formply has failed to make payments to Judo Bank.
7. If Suzie, as guarantor, has discharged Shield Formply's guarantee then she is no doubt entitled to claim indemnity from Shield Formply and contribution from her co-sureties.
8. Whether Suzie's company, Mana Assets, would have the same entitlements was a matter not explored at the hearing.

Alleged oppression - refusing to repay borrowings and salaries

1. Finally, Mr Elliott and Mr Goodyear submitted: "In exercising their control of the Shield Group, Thomas and Thomas Gem Stone have had various Shield Group entities borrow money without repaying it, thereby exposing those entities to claims by lenders - not only the plaintiff lenders in these proceedings, but external lenders such as Mr Zhong, which has led to Court proceedings, and a judgment debt, against Shield Resources … Finally, Shield Resources and Shield Intermodal did not pay, and continue not to pay, employees amounts owed to them, thereby exposing them to claims by them, as is again evident from these proceedings."
2. These submissions were not developed further.

Conclusion on oppression

1. I have found that, for the most part, Suzie's and Robin's claims that they had been oppressed by Thomas have not been made out.
2. I have found that the passage of the 12 September 2023 resolution appointing Thomas's family members to the board of Shield Holdings Australia was oppressive, albeit without any practical consequences, since no resolution was passed by that board.
3. On the other hand, it is obvious that Suzie's and Robin's conduct in excluding Thomas from all involvement in the companies of which he is the majority shareholder and in their assumption of the sole control of the Shield Group since November 2023 was oppressive of Thomas.

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

1. But, as I have said, [72] the wider background is that: 1. the relationship between these parties has broken down irretrievably; 2. there is no functional board of any of the companies in the Shield Group; and 3. the principal trading company in the Shield Group, Shield Resources, is in a parlous financial position, if not actually insolvent.
2. In these circumstances, there can be no point in these companies continuing to trade. For them to continue to trade would carry the risk, if not the certainty, of one or more of them incurring liabilities while unable to meet them.
3. I repeat this passage from Mr Elliott's and Mr Goodyear's final submissions: "There is no question that the relations between Thomas, Suzie and Robin have completely broken down. They cannot continue in business together, and absent some other order better suited to address the present circumstances and rights of the respective parties, the appropriate order would appear to be one for the winding up of all companies in the Group."
4. Later, Mr Elliott and Mr Goodyear submitted: "Therefore, if the relationship between them has broken down to a degree to justify winding up on the 'just and equitable' ground, then it would do so for all companies - not just Shield Resources."
5. In closing oral submissions, Mr Kelly submitted that all companies in the Shield Group should be wound up, apart from Shield Holdings South Australia, which he said "might be one exception" to the winding up of all companies in the Shield Group.
6. In that regard, Mr Kelly submitted: "As your Honour appreciates, we, Thomas Gem Stone in particular, claims that it has been oppressed because it has been deprived of a functioning, working board and a functioning, working manager, Thomas having been shut out, locked out, et cetera. But we have to acknowledge that Thomas Gem Stone does have available to it, the power under article 25 of the constitution of that company to move for the removal of Suzie as a director, which it has put in train in order to establish a workable board. In cases where there is an available means for the oppression to be cured by the party who is oppressed, that can be a powerful discretionary ground not to make the order. Your Honour has seen in our submissions, we respectfully submit that in the case of [Shield Holdings South Australia], the claim should simply be dismissed so as to permit the company to call a meeting and constitute a new board."

The loan claims

1. In view of that conclusion, it will likely be for the liquidator of the companies in the Shield Group to adjudicate on the remaining issues.
2. However, I will deal with them briefly.
3. Each of Suzie, Mana Assets, and Robin allege that they have advanced funds to various of the Shield Group companies.
4. Thomas did not dispute the fact that loans had been made.
5. However, Mr Kelly and Mr Maroya submitted: "… the accounting in this evidence in this matter is very unsatisfactory. Although it cannot be doubted that [Shield] Resources, for example, is heavily in debt, the Plaintiffs have asserted but not proved the unpaid loans for which they seek judgment against an assortment of [the Shield Group companies]."

Suzie's loan claims

1. Suzie claims that she is owed: 1. $752,589.97 by Shield Resources; 2. $49,500 by Shield Holdings South Australia; 3. $78,000 by Shield Hardwood; 4. $200,000 by Shield Formply; and 5. $90,000 by Shield Timber SA.
2. The evidence on which Suzie relies comprises schedules set out in one of her affidavits of the advances allegedly made to each of these companies, together with "repayments" to Suzie from Shield Resources. The schedules have been annotated to cross-reference the relevant bank statements.
3. Many, but not all, of those entries in the bank statements refer to a "shareholder loan".
4. On 25 September 2023, Robin sent Suzie and Thomas documents called "loan transaction summary" in relation to each of them. I have referred to the "Thomas loan summary" above. [73]
5. The "loan transaction summary" concerning Suzie was entitled "Suzie Loan Transaction" and recorded, under the heading "Deposit to SR" a total amount of $1,955,940.27 and, under the heading "loan payback from SR" a total of $1,209,834.23 leaving a "remaining balance" of $746,106.04.
6. Although both these columns refer to "SR", [74] the loans in relation to the deposits include "cash deposit", "cash deposit to Suzie" and "cash deposit to Suzie (from Vcoco)".
7. Other notes make reference to "SH", which Robin confirmed was a reference to Shield Hardwood. Those notes include "Suzie directly deposit to SH account" and "Michael Ma Shasong Sun deposit to SH".
8. Still other notes make reference to "Holdings account", which I infer to be a reference to Shield Holdings South Australia. Those notes include "Deposit to Holdings account" and "to holdings account".
9. Robin's covering email said: "There might be errors in the attached spreadsheets, but happy to cross-check with individual records at any time."
10. Those "individual records", whatever they may be, are not before me.
11. Suzie replied to Robin on 29 September 2023: "I can confirm my shareholder loan transactions are matching my banking records. I confirm my shareholder loan to Shield at today is AU$746,106.04."
12. The figure in Suzie's email is the "remaining balance" figure in Robin's "loan transaction summary".
13. It is true that this figure is close to the figure that Suzie claims is now due to her from Shield Resources: $752,589.97.

Robin's loan claims

1. Robin claims to be owed the following amounts: 1. $2,360,082.54 as well as US$1,600,793 from Shield Resources; 2. $82,300 from Shield Holdings South Australia; 3. $197,392.62 as well as US$1,392,033.14 from Shield Hardwood; 4. $132,300 from Shield Formply; 5. $58,000 from Shield Timber SA; 6. $93,355 from Shield Equipment; 7. $111,775 from Shield Intermodal; 8. $162,508 from Shield Construction Material Group Pty Ltd, the thirteenth defendant ("Shield Construction Material"); 9. $60,650 from Shield Biomass Energy Pty Ltd, the eleventh defendant ("Shield Biomass Energy"); and 10. $109,030 from Oz Plantation and Hewer Pty Ltd, the fourteenth defendant ("Oz Plantation").
2. These amounts total $3,367,394.16 and US$2,992,826.14.
3. In Robin's 25 September 2023 "loan transaction summary", in respect of his own position, he said that the "remaining balance" due to him was $1,347,184.62.
4. Robin repeated that figure as being the amount due to him in his 6 October 2023 document.
5. It appears that a reason the amount that Robin now claims is a much greater figure is his contention that, arising from Suzie's 29 September 2023 instruction that he assume personal responsibility for funds "sourced by" him, he has, in the circumstances I have discussed above, [76] assumed responsibility for the "$8 or $9 million" that his "friends" had advanced for the purposes of the Shield Group.
6. As I have said, in support of this contention, Robin produced a series of letters, all dated 2 May 2024, by a number of persons with Chinese names which purport to be an assignment of those persons' entitlements against various Shield Group companies to Robin. None of those persons was called.
7. In that uncertain state of affairs, although I am satisfied that one or more of the Shield Group companies is indebted to Robin, I cannot form any view about what the level of that debt might be.

Mana Assets' loan claims

1. Mana Assets contends that it is owed the following amounts: 1. $545,930 by Shield Resources; 2. $56,800 by Shield Holdings South Australia; 3. $285,850 by Shield Hardwood; 4. $85,100 by Shield Timber South Australia; 5. $22,500 by Shield Equipment; and 6. $321,976 by Shield Intermodal.
2. The total amount sought by Mana Assets is thus $1,403,256.
3. Suzie's evidence in relation to these loans is a total set out by reference to pages in the relevant bank statements with the dates and amounts of the payment. Each of those payments are simply described as "transfer".
4. In his 6 October 2023 document titled "Shield Debt Amounts as of 6 October 2023", Robin did not include any amount as being owing to Mana Assets.
5. Nonetheless, it does appear from the entries in the bank statements that monies were advanced by Mana Assets as Suzie contends.
6. Mana Assets also seeks to recover from Shield Equipment a debt that it contends was assigned to it by Tongling Ruihong International Trading Co Ltd, a company associated with Robin's nephew.
7. Mr Kelly and Mr Maroya accepted that the evidence appeared to show that Mana Assets was entitled to recover this sum but submitted that Shield Equipment is in no position to pay the amount in question. The amount was US$908,396.17, which converts to $1,392,835.

The salary claims

1. There is now no dispute about Suzie's, Robin's and Kevin's entitlement to the salary and superannuation entitlements for which they contend.
2. Thus Mr Kelly and Mr Maroya accepted that "the Court may well find that the above entitlements" [77] are payable, but Mr Kelly and Mr Maroya did not suggest there was any other dispute than the quantum of the amounts claimed.
3. Shield Resources was the relevant employer until 23 April 2023 after which the employment contracts were novated to Shield Intermodal.
4. Mr Kelly and Mr Maroya added that neither Shield Resources nor Shield Intermodal had the financial capacity to pay these amounts.

Conclusion

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

Endnotes

1. The figure determined by the Plaintiffs' expert as the value of the shares in these companies.
2. Zhong v Shield Resources Pty Ltd [2023] NSWSC 1611.
3. From [180].
4. At [23].
5. From [124].
6. Section 95A(1) of the Act.
7. Section 95A(2) of the Act.
8. [2024] NSWSC 34.
9. Citing Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; [2001] NSWSC 621 at [33] (Palmer J); Australian Securities and Investments Commission v Plymin (No 1) (2003) 175 FLR 124; [2003] VSC 123 at [370]ff, affirmed in Elliott v Australian Securities and Investments Commission (2004) 10 VR 369; [2004] VSCA 54 and see In the matter of Swan Services Pty Limited (in liq) [2016] NSWSC 1724 at [136]ff; SX Projects Pty Ltd (in liq) v Battaglia [2018] NSWSC 1830 at [20]ff (Black J) and In the matter of Bias Boating Pty Limited (receivers and manager appointed) (in liquidation) [2018] NSWSC 1977 at [4]ff and In the matter of Custom Bus Australia Pty Limited (in liq) [2021] NSWSC 1036 at [33]ff.
10. (1998) 87 FLR 371 at 379 (Emmett J); 157 ALR 615; [1998] FCA 1200.
11. In the matter of Pacific Plumbing Group Pty Ltd (in liq) (supra) at [3]-[4].
12. Supra at [34]-[35].
13. Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (supra) at [54] (Palmer J); White Constructions (ACT) Pty Ltd (in liq) v White (2004) 49 ACSR 220; [2004] NSWSC 71 at [289] (McDougall J); Lewis (as liquidator of Doran Constructions Pty Ltd (in liq)) v Doran (2005) 219 ALR 555; [2005] NSWCA 243 at [103] (Giles JA, Hodgson and McColl JJA agreeing); Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384; [2011] NSWSC 186 at [48]-[49] (Ward J, as the President then was).
14. Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran (supra) at [109]-[112]; International Cat Manufacturing (in liq) v Rodrick [2013] QCA 372 at [102]-[105] (Morrison JA, Holmes and Gotterson JJA agreeing); First Strategic Development Corporation Ltd (in liq) v Chan [2014] QSC 60 at [67]-[69] (Philip McMurdo J).
15. From [70].
16. Zhong v Shield Resources Pty Ltd (supra); referred to at [27] above.
17. ASIC, Regulatory Guide 217, "Duty to prevent insolvent trading".