Queensland Vedic Cultural Centre Pty Ltd v Deo
[2024] QCATA 101
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- Queensland Vedic Cultural Centre Pty Ltd v Deo[2024] QCATA 101
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Queensland Vedic Cultural Centre Pty Ltd v Deo[2024] QCATA 101
Queensland Vedic Cultural Centre Pty Ltd v Deo[2024] QCATA 101
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Queensland Vedic Cultural Centre Pty Ltd v Deo [2024] QCATA 101 |
PARTIES: | Queensland vedic cultural centre pty ltd (Company/appellant) v soneel deo (respondent) |
APPLICATION NO/S: | APL204-23 |
ORIGINATING APPLICATION NO/S: | MCD 524-21 |
MATTER TYPE: | Appeals |
DELIVERED ON: | 27 August 2024 |
HEARING DATE: | On the Papers |
HEARD AT: | Brisbane |
DECISION OF: | Member Richard Oliver |
ORDERS: |
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CATCHWORDS: | APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – JURISDICTION – DETEMINATION OF A PRELIMINARY POINT – where appeal from an adjudication – where applicant and respondent entered into a Share Agreement for the issuing of a share in the applicant company – where respondent terminated the Share Agreement pursuant to its terms – where the respondent sought a refund of money paid as a debt of liquidated demand – whether the transaction and the rights and obligations of the parties governed by the Corporations Act 2001 (Cth) – whether dispute falls within the definition of minor civil dispute. Queensland Civil and Administrative Tribunal Act 2009, sch 3 Corporations Act 2001 (Cth) s167A, 170, 700, 703, 704 and 717 Compass Marinas Australia Pty Ltd v State of Queensland [2021] QCA 293 |
APPEARANCES & REPRESENTATION: | This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) |
REASONS FOR DECISION
- [1]This appeal is one of many in which the appeal tribunal has been directed to consider a preliminary issue, which may assist in the determination of all these appeals.[1] Each of the appeals is from decisions made in the minor civil disputes jurisdiction involving the applicant, Queensland Vedic Cultural Centre Pty Ltd (“the Company”) and various other respondents to the appeals. To put the preliminary issue into some context, it is necessary to record the brief factual background that gave rise to the dispute in the first place.
- [2]The Company is a propriety limited company The Company embarked on a project to build a community hall for the members of the Verdic community at a site in Willawong, Brisbane.
- [3]The project was financed by loans from the Bank of Queensland. After the project commenced, directors of the Company realised that there would be a shortfall in funding and decided to raise extra money from members of the Vedic community by the issuing of shares in the Company. To achieve this outcome, a Share Agreement dated 10 November 2014 was prepared setting out the terms upon which a share or shares could be acquired by a member. Some relevant recitals to the Share Agreement are as follows:
- The QVCC in conjunction with APSQ has purchased the property at 198 Learoyd Road Willawong, 4110 Queensland thereafter referred to “The Property”.
- The objective to acquire “The Property” is to construct a multi-purpose community centre for religious and cultural events and educational purpose. It may include other development to meet the needs of the members.
- The Member hereby agrees to pay $................ for ……shares in QVCC (ABN 27 600 692 279.
- The Property was acquired subject to loan from Bank of Queensland, hereafter referred to as the Bank. The loan was granted on the condition that directors and shareholders give personal guarantees to the bank. Further, only guarantors to be directors and shareholders.
…………………
- In accordance with the conditions of the loan while the loan is in existence there cannot be any additional directors or shareholders added into the company without the banks approval.
………………..
- After QVCC is able to provide the bank financial reports for two years, it will release all the guarantors. Upon release of guarantors share certificates can be issued.
- [4]The Share Agreement then went to set out the Terms of Agreement. Relevantly they included:
- Shares/monies will be held in trust (Account no…..) until the guarantors discharged.
…………….
- The member shall make contributions of $....per month towards the repayment of the loan.
- Each share is worth $1,000.00.
……………..
- The member may terminate this agreement at any time during the term of loan which is 25 years provided the member gives notice at least 30 days in advance of his/her intention to terminate this agreement.
- On termination of this agreement by the member, the value of the initial shares made by the member will revert to APSQ Inc. shareholding. The member may ask for a refund of his initial share/s value and the repayment and such payment will be made to the member within 90 days period. Alternatively the member may resell his share/s to another member
- [5]Pursuant to this Share Agreement the respondent signed it and paid $1,000.00 to the Company for one share, this is not disputed. The Share Agreement was not signed by the Company, but it accepted and held the money. The respondent also made payments towards the repayment of the loan, but does not seek recovery of this amount.
- [6]As the Bank of Queensland would not authorise the issuing of further shares at that time, no share was ever issued to the respondent. He decided to exercise his rights and terminate the agreement and then made demand for the return of his $1,000.00 (the cost of one (1) share). The Company refused to refund the money. Initially, it alleged it was a donation, but the Company has since resiled from that position because it was untenable.
- [7]To recover his contribution, the respondent commenced a proceeding in the minor civil disputes jurisdiction of the Tribunal in reliance on the Share Agreement. There was a hearing, on 31 May 2023 and the Tribunal found in favour of the respondent on the basis of the clear terms of the Share Agreement about termination. It ordered the Company pay the respondent the sum of $1,123.20 (which included the filing fee). The appeal followed.
- [8]Because the Company, having abandoned the donation point in the appeal, raised for the first time the application of the Corporations Act (Cth) (“the Act”) to this dispute. Because of the number of appeals the appeal tribunal directed that there be a determination of a preliminary point, that is:
Whether jurisdiction conferred by s 1337B of the Corporations Act (Cth) 2001 more appropriately deals with this transaction whereby the claim confers a legal or equitable interest in shares or an option to acquire shares in an Australian propriety limited company which were granted by its fund-raising activities governed by …..
- [9]The directions then make reference to various sections of the Act, ss 167A and 170, also ss 700, 703 and 704.
- [10]The parties were directed to file submissions in respect of this discrete point, which they did.
- [11]The respondent raises the obvious point that now that the Company accepts that the agreement did provide for the issuing of a share, subject to the conditions in the agreement, it was the Company’s responsibility to ensure compliance with the requirements of the Act when it came to issuing shares. In particular the respondent refers to s 717 of the Act which sets out an overview or procedure imposed on companies when offering securities. The table referred to in the section summarises what is required to make an offer of securities and the disclosure necessary to prospective investors, this includes signposts to various relevant sections of the Act.
- [12]In his submissions, the respondent provides a summary of those procedures. The important feature here is that it is the Company who is seeking to raise capital for the project under construction. If the way to achieve that is by offering shares in the Company, it is the Share Agreement which provides the mechanism to do so, it invites participants to purchase a share. It is not for an applicant acquiring a share in the company to investigate, and ensure, that that the company has complied with all its obligations and requirements under the Act. That is the sole responsibility of the company through its officers.
- [13]The Company on the other hand has simply submitted, without authority, any references to the Act or any other rational basis, that the Tribunal does not have jurisdiction simply because one party to the Share Agreement involves a proprietary limited company. The Company goes on to submit:
I believe that any matter related to the application of full allotment of share, or cancellation of shares or refund of money paid for allotment of share should be dealt with as per the provisions of the corporation act 2001. This act provides the practises and procedures for proceedings for resolutions of all matters relating to shares in a company.
- [14]The submission is particularly unhelpful as to how the Act applies to the circumstances here.
- [15]The Share Agreement is a straight uncomplicated bargain simply stating that a party can agree to buy a share in the company at $1,000 for each share. If the share does not issue, or for any other reason, the party is at liberty to terminate the agreement and seek a refund of the money paid. There are no terms or conditions in the Share Agreement that imposes any responsibility on the party taking up the share to ensure that the Company/applicant complies with its obligations under the Act. Likewise, there is no condition precedent that the Company to do so before a refund can be made.
- [16]That general statement from the Company does not provide any assistance in determining the preliminary issue of whether proceeding under the Corporations Act is the more appropriate vehicle for resolution of this dispute. In fact, in my view the contrary argument reinforces the position of the respondent because no share was ever issued and therefore he had no legal interest in the respondent. Also, that it was agreed he could, under the Share Agreement, unilaterally terminate the agreement, which he did before the issuing of the share or shares. He was entitled to a return of the value of that initial share he purported to take up in the respondent.
- [17]In those circumstances, this is a straight forward claim for a debt or liquidated demand under the terms of the Share Agreement for which the Tribunal has jurisdiction under the definition of minor dispute.
- [18]In my view, the Act has no part to play in this dispute. In other words, it ill behoves the Company to now seek to defend the claim on the grounds that it does not have to refund the money because it did not comply with obligations that may have been imposed on it by the Act in respect of issuing a share to the respondent.
- [19]By the Share Agreement the Company promised to refund the value of the share on termination of the agreement. The agreement was terminated and therefore the refund must follow. The outcome of the primary minor civil dispute proceeding is consistent with this view.
- [20]There is one other point. The issue raised about the application of the Corporations Act to this dispute was first raised in the appeal, It was never argued in the primary hearing before the learned adjudicators. There is no reason why the general principal that an argument not put before the original decision maker should now be considered in the appeal. In Compass Marinas Australia Pty Ltd v State of Queensland[2] the Court of Appeal said:
A party ordinarily should not be permitted to raise new points on appeal if, had the points been raised at trial, they might possibly have been met by additional evidence at the trial or the opponent might have conducted its case differently: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Coulton v Holcombe (1986) 162 CLR 1 at 7-9; Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly trading as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661 per Fraser JA at 698-699 [149].
- [21]The applicability of the Corporations Act could have been ventilated in the hearing below.
- [22]In response to the specific questions raised to be decided by way of a preliminary issue I would conclude that:
- the dispute in relation to the Share Agreement and refund of money paid falls within the definition of minor civil dispute in schedule 3 of the Queensland civil and Administrative Tribunal Act 2009.
- Section 1337B of the Corporations Act 2001 (Cth) does not more appropriately deal with the transaction between the Company and the respondent under the Share Agreement the subject matter of this dispute.