Re Dawning Investments Pty Ltd [2022] VSC 641

“But our relationship hasn’t broken down!”
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C1 and C2 did development work together.
Two natural persons, P and D, were inter alia (i) equal shareholders in C1 and C2, and (ii) dirs of C2. D was the sole dir of C1: [1] 
P brought an application pursuant to s233 and s461 to wind up C1 and C2: [2]
Originally, D had borrowed money from P’s parent for the venture. P’s parent only agreed so P could learn the property development business in a quasi-partnership venture, built on trust: [4], [54]
Various loans between the entities, and P’s parent, were made for C2 to purchase properties for development: [9]
Over time, P’s spouse became involved: [11] - [15]
P took a passive role in the venture: [53]
P alleged D caused over $3m in improper transfers from C1’s accounts: [59] - [61]
D returned a significant amount of that sum: [62] - [64]
Evidence suggested D “parked” some of C1’s money in D’s own offset accounts to reduce D’s interest payments, and bought a car without permission: [66], [67], [70], [81]
D diverted funds of C1 that could have been used to pay its debts and made other payments with a lack of transparency; apparently a breach fo DDs, as well as sufficient to enliven both s461 and s232: [75]
The breakdown in relations was shown by increasingly toxic WeChat exchanges: [90] - [93]
The lack of trust stymied further development opportunities, but D said suggestions of a breakdown in relations were exaggerated: [98], [99]
C1 and C2 had not prepared financial statements from 2018 with no explanation: [107]
D blamed P’s spouse for not providing the supporting documents needed: [101] - [104]
Breaches of DDs and inadequate accounts can be sufficient to wind up a Co on the just and equitable basis: [109]
C1 and C2 also failed to comply with their tax obligations or pay their debts; likely a breach of D’s DDs and sufficient to ground an s461 order: [110], [116], [122]
The failure by C2 to resist a VCAT claim against it is further evidence of deadlock between the parties: [128]
The lack of records made it difficult for the Court to understand the Cos’ position. It appeared at least one insolvency test might be met: [129], [133]
To the extent that D raised transactions P engaged in that might have been improper, the Court considered a liquidator would be well placed to pursue these: [154]
The erosion of trust and confidence meant it would be just and equitable to wind the Cos up (s461) and that the Cos’ conduct was relevantly unfair (s232): [159] - [161]
The status quo was “wholly unsatisfactory” and the existing problems - tax debt, poor record keeping and governance - were likely to worsen. Independent liquidation was therefore attractive: [166]
There was no alternative remedy and so the Court ordered that C1 and C2 be liquidated: [167] - [177]