Lieu & Anor v Deng & Anor (No 4) [2007] NSWIRComm 72

Lieu & Anor v Deng & Anor (No 4) [2007] NSWIRComm 72

The Court found the Shareholders' Agreement and Sale of Business Agreement, as executed, were unfair at their inception and/or became unfair due to the respondents' conduct, specifically: (i) repayment of $85,000 to Ms Deng from company funds contrary to the agreement and not disclosed, (ii) payment of remuneration to Ms Deng substantially in excess of the agreed amount without applicants' consent, and (iii) the resultant failure to distribute profits to the applicants. The Court held the agreements should be varied to award the applicants 49% of the repaid $85,000, a share of salary overpayments and of the personal component of vehicle expenses, and an additional amount to Lieu...

Parties
First Applicant: Paul Lieu; Second Applicant: Landmark Enterprises Pty Ltd; First Respondent: Margaret Deng; Second Respondent: Dengs Investments Pty Ltd
Jurisdiction
Australia
Judgment Date
30 March 2007
Procedural Posture
Application Under S 106 Industrial Relations Act 1996 (nsw) / Judgment at First Instance
Outcome
Relief granted in part; agreements declared unfair and varied; monetary and declaratory orders made; costs reserved.
Legal Topics
Unfair Contracts, Shareholders' Agreements, Sale of Business, Remedies Under S 106 Industrial Relations Act, Jurisdiction Under S 106, Dividend Payments, Directors' Remuneration
Employment Law Company Law Contract Law Unfair Contracts Shareholders' Agreements Sale of Business Remedies Under S 106 Industrial Relations Act Jurisdiction Under S 106 +2 more

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Parties

Paul Lieu

First Applicant

Landmark Enterprises Pty Ltd

Second Applicant

Margaret Deng

First Respondent

Dengs Investments Pty Ltd

Second Respondent

Procedural Posture

Application Under S 106 Industrial Relations Act 1996 (nsw) / Judgment at First Instance

Legal Issues

  1. 1 Whether the Shareholders' Agreement and Sale of Business Agreement were unfair, harsh, or unconscionable under s 106 of the Industrial Relations Act 1996 (NSW)
  2. 2 Whether the Court had jurisdiction under s 106 and s 106(2A) of the Act to vary the agreements
  3. 3 Whether respondents' conduct amounted to unfairness by repayment of purchase price, salary increases, or exclusion of applicants from company information

Ratio Decidendi

The Court found the Shareholders' Agreement and Sale of Business Agreement, as executed, were unfair at their inception and/or became unfair due to the respondents' conduct, specifically: (i) repayment of $85,000 to Ms Deng from company funds contrary to the agreement and not disclosed, (ii) payment of remuneration to Ms Deng substantially in excess of the agreed amount without applicants' consent, and (iii) the resultant failure to distribute profits to the applicants. The Court held the agreements should be varied to award the applicants 49% of the repaid $85,000, a share of salary overpayments and of the personal component of vehicle expenses, and an additional amount to Lieu...

Court Disposition

Relief granted in part; agreements declared unfair and varied; monetary and declaratory orders made; costs reserved.

Orders

  • Ms Margaret Deng is to pay Landmark Enterprises Pty Ltd $85,904.19.
  • Interest payable from 14 October 2004 in accordance with Schedule 5 of the Uniform Civil Procedure Rules 2005.