Most Read Contributor in Australia, September 2016
The recent decision of the NSW Supreme Court of Appeal in
Gooley v Motasea Pty Ltd  NSWCA 31 highlights the
importance of adhering to the procedures specified in a
company's constituent documents and under the Corporations
Act 2001 (Cth) (Act).
In particular, the decision is a reminder for shareholders of
family owned and other closely held companies of the need to ensure
that any legal preconditions for effecting any changes to the
composition of the board of directors, or any shareholders of a
company are complied with.
The primary issue in the proceedings was whether Janine Gooley
was one of two shareholders in Motasea Pty Ltd
(Company), a company with substantial property
The Company was closely held, having been established by
Janine's parents, Bill and Joyce Gooley in 1998. At the time of
incorporation of the Company, Mr and Mrs Gooley each held one
share, as recorded in the Company's 1996 annual return.
Following the death of Joyce Gooley, where probate was never
obtained on her estate, her one share in the Company was
transferred to Bill Gooley.
In contending that she was a member of the Company, Ms Gooley
placed particular reliance on the Company's annual return from
the year 2000, which had been lodged personally by her father and
stated that Ms Gooley had become a shareholder of the Company. This
was consistent with Ms Gooley's recollection that her father,
following her mother's death in 1999, told her that he intended
to transfer a share to her.
Mr Gooley, however, denied this at trial and said he had been
mistaken when he completed the 2000 annual return.
Neither Ms Gooley nor the Company were able to tender the
Company's share register, any share certificates, any signed
instrument of transfer or any evidence of a director's
resolution in respect of a share transfer in Ms Gooley's
Lemming JA found that Ms Gooley had failed to discharge the onus
of proving that there was a legally effective transfer of one share
of the Company from her father to herself.
In support of his finding, he noted Ms Gooley's failure to
tender any documents which reflected a transfer of a share to her,
her failure to give evidence of signing a transfer or receiving a
share certificate and her father's uncontradicted evidence that
he had erroneously filled out the annual return.
Implications for Companies and Shareholders
Family owned and other closely held companies may often neglect
the importance of complying with the reporting and procedural
requirements of their constituent documents including the
company's constitution, the Act and any shareholder agreements.
This is often due to the friendly and familial relationships
between shareholders and directors of these types of companies.
However the case of Gooley demonstrates how sentiments can
change with time and how a failure to comply with the formalities
can have a significant impact.
Consequently, this decision provides a warning to directors and
shareholders of the importance of treating changes to the company,
such as appointment of directors and sale and transfer of shares,
as significant legal acts, rather than simply administrative
Gooley v Motasea should also serve as a reminder to minority
shareholders, and shareholders in closely held companies, that it
is not sufficient to rely on the company or its secretary to effect
changes and that they should be persistent and diligent in
verifying that the formalities have been satisfied and, in
particular, obtaining a share certificate when they have engaged in
a share purchase agreement.
This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader's
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).